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General Motors to pay back taxpayers with their own money
Posted Nov 16th 2009 8:40AM by Zac Bissonnette (RSS feed)
Filed under: General Motors (GM)

In a bit of corporate strategy that would make Bernie Madoff blush, General Motors plans to use bailout money to pay back the $6.7 billion loan it has from the government.

The rest of the $50 billion flushed into General Motors has been converted into equity, meaning it does not have to be paid back. The Wall Street Journal reports (subscription required) that "GM still has $13.4 billion in an escrow account that came from its U.S. bailout, or twice the amount it needs to pay the government back. While repaying the loan promises to further bolster the health of the company's balance sheet, it also locks up cash that could be used to fund operations if the U.S. economy continues to slump, or if GM cannot arrest a severe decline in its sales and market share."