GM to make early bailout repayment
Flags fly outside the General Motors world headquarters building in Detroit, Mich.
TEXT OF INTERVIEW
Bill Radke: General Motors today will reportedly make an early repayment on bailout money it got from the federal government. The car company has years to pay back $6 billion in loans. But it could write a check for the balance today with a formal announcement tomorrow in Kansas City. Here to talk about it is Marketplace's Gregory Warner who joins us live. Good morning, Gregory.
Gregory Warner: Good morning, Bill.
Radke: So where did GM get all this money?
Warner: Well GM did pretty well last quarter. They had better-than-expected earnings and they hope to post a profit this year. They've also announced plans to reopen hundreds of dealerships that closed last year when they were filing bankruptcy. So while they don't technically have to pay this money back for a couple of years, by paying it early, they want to reassure investors and car buyers that they're financially stable, they don't need the government cash. I should say the White House wants this very much, too. President Obama has been quick to praise earlier payments by GM; he'll surely hold this up to say, look, the bailout was the right thing to do.
Radke: So was it then, Gregory? Does this make the GM bailout an official success?
Warner: Certainly General Motors would say yeah; they're trying to shed this stigma of the bailout. And they're looking down the road at Ford, the only big American car company that did not take the bailout, Ford has done a lot better job in selling cars. The truth is though this repayment is only the first step for GM. Remember, the bailout was $50 billion. Most of that money from the U.S. Treasury went into buying shares of the company, and those stocks don't have any value yet because GM still has to go public, and that won't happen until next year at least. So even after this repayment, taxpayers still own, what, 61 percent of General Motors.
Radke: Right. Marketplace's Gregory Warner. Gregory, thank you.
Warner: Thanks Bill.