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GM will repay bailout loans in June
General Motors will pay back its bailout funds in full to the United States government by the end of June, the Department of the Treasury announced Monday.
GM will repay the $6.7 billion in loans it received in 2009 from the Troubled Asset Relief Program (TARP) after having said late last year that it would accelerate its repayment.
GM and Treasury amended their loan agreement to require that the automaker, which underwent an organized bankruptcy and reorganization last year, make the loan repayment by June 30, 2010. In essence, the new agreement forces GM to repay its loans by June, and not have until the original 2015 deadline to repay the loan.
Bloom characterized the new agreement as a "mutual" decision between the government, which maintains a controlling stake in the automaker, and GM.
"We have regular dialogue with General Motors regarding issues facing the company," he said. "I think both of us thought this was a good idea; I can't tell you who the initiator was. So I would tell you it's a mutual thing."
The repaid loans will hardly end the U.S. government's involvement in the company, however.
The government invested almost $50 billion in GM over the course of the last year, debt which was converted to equity in the automaker. The federal government maintains a 61 percent stake in the company.
Bloom said that the government aims to scale back its ownership in the company during the second half of 2010, when they expect the new GM to make an initial public offering.
"At that stage we would expect to sell some of our ownership," Bloom said, before cautioning: "We don't think it would be a good idea to sell all of our 60.8 stake in one fell swoop."
Bloom said the length of time it would take the government to extricate itself from the automaker would depend on "market factors."
The announcement also comes on the heels of GM's decision to make interim CEO Ed Whitacre its permanent chief executive, the third corporate chief the company has had in a year.
Bloom stressed that the decision to install Whitacre permanently was without any influence by the government.
"That was a decision by the board of directors of the company," he said. "We certainly wish Mr. Whitacre well in this very challenging endeavor he's taking on."
The auto czar also said the government's "pay czar" for firms on Treasury support would remain in charge indefinitely for setting top GM officials' compensation.
"The precise determination of the period under which Mr. Feinberg will be supervising GM is still being worked out," Bloom said.
This story was initially posted at 12:25 p.m. and updated at 2:30 p.m.
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