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GM to Repay Government Loans Early, Cites Profit Progress

Despite reporting more than a billion-dollar loss since July, General Motors says it expects to pay the federal government's bailout money back five years early. Gwen Ifill speaks with David Shepardson of the Detroit News for more.

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  • JIM LEHRER:

    Next tonight, Gwen Ifill updates the General Motors story, its progress on both the business and bailout fronts.

  • GWEN IFILL:

    The bad news: General Motors announced today that it's lost more than a billion dollars since July. The good news: In spite of that, GM chief executive Fritz Henderson said, the troubled auto company will pay back about a billion dollars it borrowed from the federal government, five years ahead of schedule.

    Henderson was asked today about the timing of the announcement.

  • FRITZ HENDERSON:

    I have probably been asked the question since the bankruptcy, I don't know, actually, probably 100 times, when are you going to start paying back the taxpayer?

    The answer is now. So, I mean, I think it's a commitment of the company that we need to start doing this. And the best place to start is with the loan and to agree to a repayment schedule and begin the process. This is — we absolutely felt was the right thing to do.

  • GWEN IFILL:

    For more on the general health of General Motors, I'm joined now by David Shepardson of The Detroit News.

    Welcome.

  • DAVID SHEPARDSON:

    Thanks.

  • GWEN IFILL:

    So, basically, GM used taxpayer money to pay back taxpayer money; is that right?

  • DAVID SHEPARDSON:

    I mean, in a nutshell.

    I mean, basically, the U.S. government gave General Motors about $50 billion in taxpayer loans starting in December and going through July. At the end of their bankruptcy, they gave them $16 billion in exit financing: Put this in a special account that requires government approval to spend the money.

    It was for contingencies, if the economy really went south, to pay various obligations. And because things have gone better than GM and the Treasury expected, GM is going to start using that money to pay back the loan, ahead of schedule.

  • GWEN IFILL:

    So, it doesn't mean that, somehow, they are paying down the loan, or that somehow the U.S. taxpayer is going to come out ahead in the end.

  • DAVID SHEPARDSON:

    Well, certainly not ahead, but, look, GM has this money. They could hold on to it. I mean, initially, in July, company executives suggested they might not use any of the money to pay it back. They might use it for pension obligations or other — or other expenses.

    So, it is a sign that GM is doing better than expected. But it's not as if this is new money that GM has earned to pay the taxpayers back.

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