GM's Disingenuous New Commercial

In case you missed it, General Motors has a new commercial out bragging about the company paying back all of its government debt. Last week, the company paid back the last $4.7 billion of its $6.7 billion loan. Does that make its commercial accurate? Technically, but if you consider the bigger picture, then this repayment looks much less significant than GM wants Americans to believe.

Here's the commercial:

The key quote comes from GM Chairman and CEO Ed Whitacre towards the beginning:

We have repaid our government loan in full, with interest, five years ahead of the original schedule.

Again, this is technically true. The entire $6.7 billion loan has been repaid. But as pointed out last week, that was a small fraction of its $50 billion bailout. The U.S. government still retains 60.8% ownership in the firm, even though the tiny bit of debt has been repaid. So to act like GM is in the clear in regard to its obligation to the government is misleading at best and disingenuous at worst.

In fact, it shouldn't have been very hard for GM to repay this loan -- even without any profit. That's because it used the equity injection from its bailout to repay the loan, according to Special Inspector General for TARP, Neil Barofsky. So even implying that GM was able to repay the government loans due to its improved performance is misleading. In reality, it just took money from Uncle Sam's right hand and put it into his left.

(Nav Image Credit: JustMcCollum (Read Profile!) flickr)

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In