You might remember this advertisement from GM:
“I’m Ed Whitacre from General Motors. A lot of Americans didn’t agree with giving GM a second chance. Quite frankly, I can respect that. We want to make this a company all Americans can be proud of again. That’s why I’m here to announce we have repaid our government loan, in full, with interest, five years ahead of the original schedule. But there’s still more to do. Our goal is to exceed every expectation you’ve set for us. We’re putting people back to work: designing, building and selling the best cars and trucks in the world, with our 100,000 mile, 5-year Powertrain Warranty to guarantee the quality and the unmatched live-saving technology of OnStar, to help keep you safe. From new energy solutions to the designs of tomorrow, we invite you to take a look at the new GM.”
This advertisement a lie, GM did not pay back their loan, they took unspent TARP money and gave it back to the government, in other words, they used borrowed government money to pay back borrowed government money, neat trick, right?
Today, the Competitive Enterprise Institute today filed a formal complaint with the Federal Trade Commission, arguing that General Motors misleadingly claimed in a national TV ad that the company has paid back taxpayer bailout loans. The CEI urges the FTC to investigate the GM ad campaign entitled “GM Repaid Government Loan Ahead of Schedule.” The ad features GM’s Chairman and CEO, Ed Whitacre, who declares that “we have repaid our government loan in full, with interest, five years ahead of the original schedule.”According to a recent Congressional Budget Office report (issued before GM’s announcement), “U.S. automotive companies—along with associated financing agents and parts manufacturers—have received a total of $85 billion in commitments of TARP funds and have repaid $3 billion of principal.” For GM specifically, the report states “$48 billion in financing is still outstanding.”
The CEI rightfully charges that the ad “gives the false impression that GM has used its own funds to pay back all the bailout money that it received from the federal government. In fact, GM has only repaid a fraction of those funds—barely ten percent. And as indicated above GM repaid its loan by using other federal funds.”
To add insult to injury, GM’s misleading ad could unfairly dupe consumers into a false, renewed confidence in the company, the complaint explains. “Consumer purchasing decisions can easily be affected by such considerations, as the FTC has long recognized in prohibiting false claims that products are ‘Made in the U.S.A.’”
Sam Kazman, CEI General Counsel, point out the real-world absurdity of GM’s claim. “If I applied for a car loan using GM’s financially misleading approach, I’d be tossed out of the dealership on my ear.”
“GM might argue that its ad is literally accurate, but the fact is it’s completely misleading,” said Hans Bader, CEI counsel.
CEI urges the FTC to promptly investigate, to “serve the American public on this issue of major consumer and taxpayer importance [and] “discourage other beneficiaries of government bailouts from falsely misrepresenting their status.”
Even the NY Times said the GM claim was fraudulent, in an article entitled Paying Back Taxpayers With Their Own Cash, the liberal’s bible said:
More importantly, this “repayment” is just a drop in the bucket compared to what GM has received from taxpayers. The federal government has yet to recover the lion’s share of the more than $50 billion it loaned the company. Why? Because that $50 billion was mostly “converted into stock held by the Treasury Department.” That’s billions of dollars for stock in a company that, for all intents and purposes, was bankrupt. (GM just lost another $4.3 billion.)
Sadly while the Competitive Enterprise Institutes claim is valid, it is very unlikely that an FTC appointed by the President would over-rule an commercial that has its roots in the administration. Don’t forget, it was the President that first bragged that GM paid back its loans.
But in the unlikely case that the FTC rules against GM, I have a solution, the commercial below;