Jim Doyle & Associates Blog

GM’s Payback Ads are Sleazy


I am rooting for the new GM to be successful. I think that will be good for America and good for a whole lot of friends of mine who own GM dealerships.

But I think the ad campaign from GM’s CEO Edward Whitacre is sleazy. This is the ad where he’s bragging about the company paying back the ALL the money the government loaned them…in full……and with interest.

One of my father’s favorite sayings was “figures don’t lie but liars can figure.”

So here’s the deal about this so called payout according to a great post on Bloomberg Business Week.

“The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly web cast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.”

Yes you read that correctly:

- The government LOANED GM a little over $6B.

- GM paid that back with additional bailout money!!

- The US Government also made a $49.5 BILLION equity investment in GM. The Canadian government also made a big equity involvement.

So what GM’s Whiteacre said in his ad may be great PR….his attempt to remove the “bailout monkey” from his back because GM has seen how not taking money has benefited Ford. But it’s a long way from the whole story.

And frankly it offends me.

What do you think?