GM Spending Federal Bailout Billions on 'Operating Expenses,' Specific
General Motors' steady slide toward bankruptcy protection despite the
government's massive rescue efforts raise the question of what happened
to the billions of dollars it has received in federal loans.
The federal government has injected nearly $20 billion dollars into GM
-- including $13.4 billion in December and a higher-than-expected $4
billion this month.
"It's being used for operating expenses," GM spokeswoman Julie Gibson
When asked for specifics, Gibson said it's been used for payroll,
suppliers, plants and other operational expenses. But Gibson could not
say how much of the money had been allocated to each expense or how much
"We have money coming in and out," she said, adding that some of the
funds are kept as cash on hand.
When asked how the rest of the federal funds will be used, Gibson said,
"It's kind of a difficult question to answer because the money continues
to be used for operational purposes. It's kind of hard to spell it out."
Gibson noted that the company's priorities were outlined in its
viability plan that was rejected by Obama's auto task force.
She suggested poring over GM's financial earnings report for more
details. The report shows the company reported a first quarter loss of
$6 billion, with revenue falling by more than half. But details on how
the billions of federal assistance have been used were lacking.
The White House and the Treasury Department refused to return repeated
messages requesting an interview.
"You're running a fool's errand trying to get an account of it," said
Gerald C. Meyers, a professor of business at the University of Michigan
and an auto industry expert.
"It's fungible. When you pour it in, it just gets spent. It's not
assigned to anything. They take it one from one pocket to another pocket."
Meyers said allowing GM to go into bankruptcy late last year, as many
GOP lawmakers called for, still would have cost the government money to
support those who lost their jobs.
"It may not have been $19 billion, but it would have been billions," he
said, calling it a "social cost."
GM is expected to file for bankruptcy next week. The federal government
would have to pour billions more into the company to help it through
bankruptcy court reorganization.
GM said Thursday a committee of bondholders has agreed to a sweetened
deal proposed by the government to erase the automaker's unsecured debt
in exchange for company stock. The news came in a regulatory filing that
spells out the Obama administration's game plan for what it hopes will
be a speedy Chapter 11 bankruptcy reorganization that will leave GM with
a much smaller debt load and the federal government as the dominant