Quote:
Originally Posted by Xanthos
GM requested the federal bailout money in a time of hardship. When they received that money, a certain amount of it was given as a loan (unsecured, to be repaid) and the rest was treated as a government investment in the company in the form of stocks. GM did not have to use the entirety of the money from the loan portion before they got to the point where they felt they were profitable enough to use that and some of their cash reserves to repay the remainder of the loan. I really don't see how this is a problem in any way.
Say I, as an individual, go to the bank because I'm having trouble with bills. I request and am approved for a 1500 dollar signature loan on a 12 month term. I take that loan, use 600 of it for bills, and set 900 aside in a savings account in case I need it while I get back on my feet. I then proceed to pay off the signature loan without touching the 900 in that savings account. Awesome!
Alternatively, lets say two months into the loan term I get back on my feet enough that I feel comfortable covering my expenses without that "rainy day" backup fund. The remaining balance on the loan is, for the sake of discussion, 1300 dollars. I take that 900 dollars, plus 400 dollars of money from my income (or anywhere, really) and pay off the signature loan. How is this any different, aside from the balance of my bank account after payoff and the time between disbursement and payoff?
Honestly, I don't see why anybody is upset by this. GM paid back the money they borrowed early at the expense of their total cash reserves. Only time will tell if it was a good decision for the company, but it is nothing but good news for the government.
- X
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Best post in this thread, I don't understand what is so bad about this, They paid back the debt with the borrowed money that they did not use and have no need for it, so how is this a bad thing???
GM: Heres the borrowed money back Uncle sam, turn out that I don't need it after all.