A regulatory expert says the effort by General Motors to spin its massive third-quarter loss is just like "putting lipstick on an Edsel."
General Motors lost nearly $1.15 billion in the third quarter of the year, yet the embattled automaker's chief executive Fritz Henderson says the company is showing "some signs of progress and some signs of stability" and a "good, strong liquidity position." GM is also vowing to repay taxpayers for the $50 billion bailout it received from the federal government. The bailout was awarded with the stipulation that GM would repay the government in the form of a $6.7 billion senior note and a 60 percent equity stake. James Gattuso, senior research fellow in regulatory policy at the Heritage Foundation, says GM's touting of its promise to repay federal loans is a bit of misdirection. "Most of the federal investment in GM is not in the form of loans, but in the form of equity - the ownership share of GM. No matter what loans they pay back, the investment in equity that the taxpayer has is not going to be coming back. There's going to be a loss for the taxpayer there." Gattuso notes that the TARP Inspector General and the Congressional Oversight Board both back up his contention that a full repayment of the GM bailout is not likely.
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