By Vicki Needham and Michael O'Brien - 04/21/10 04:28 PM EDT
The Obama administration launched a media blitz Wednesday to promote
the early repayment of billions of dollars in loans to General Motors.
repaid $5.8 billion in outstanding loans to the U.S. that it had received last year during a government-supervised
bankruptcy that significantly restructured the beleaguered automaker.
The repayment came five years ahead of schedule.
Larry Summers, President Barack Obama's chief economic adviser, said the repayment and better-than-expected operating profit were the direct results of decisions made by the administration.
"The prospect of a faster-than-anticipated exit from government involvement and a return of most of the taxpayers’ investment in these companies has materially improved," Summers said.
"This turnaround wasn’t an accident of history," Summers added in a White House blog posting. "It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler — and indeed the auto industry — a lifeline, if they could demonstrate the will to reshape their businesses and chart a path toward long-term viability without ongoing government assistance."
Chrysler, which was acquired by the Italian automaker Fiat after its
own bankruptcy, announced Wednesday that it had lost $4 billion over
the past year, but said that it had posted a net operating profit for
the first quarter of this year. Its chief executive, Fiat's Sergio
Marchionne, said Chrysler was on track to break even this year.
White House press secretary Robert Gibbs said that while the administration doesn't believe that GM and Chrysler have escaped danger of another collapse, the news represents a validation of the president's decision to get involved with the automakers.
"I'm making the case that, looking back, almost a year later from the president making a very difficult and unpopular decision to loan money to GM and Chrysler, in order to go through a structured bankruptcy, and save 1 million to 3 million jobs," Gibbs said, "I think we could all agree that the depth of our economic downturn would hardly have been helped with those million or so people additionally out of work."
Republicans have long derided the bailouts, and have included the matter in election-year talking points to decry the administration's handling of the economy.
The company hailed the repayment, saying it showed the company was turning itself around.
"Our plan is working," said Edward Whitacre Jr., chairman and CEO of the company.
The government is still on the hook to GM for billions, as it owns 61 percent of GM after converting $43 billion of the $50 billion in
help into equity.
The Treasury can't
start selling its stock until GM has an initial public offering.
Selling off those shares could take up to two years, analysts have
GM also repaid an additional $1.1 billion to the governments of Canada and Ontario. The loans will be repaid from unused Treasury funds being held in escrow.
GM reported better-than-expected earnings for the final three months of 2009, and analysts predict the company could make a profit as early as the second quarter of 2010.
GM officials are aiming to go public again, possibly sometime this year or early in 2011.
Whitacre is expected to make his first visit to Capitol Hill on Wednesday to meet with Speaker Nancy Pelosi (D-Calif.) and the Michigan delegation.
He also announced a $250 million investment in the Chevrolet Malibu sedan for plants in Fairfax, Kan., where he made Wednesday's announcement, and Hamtramck, Mich., which is expected to create jobs.
This story was posted at 10:46 a.m. and updated at 12:28 and 1:03 p.m.