Obama Administration knew for weeks that GM would make fraudulent claims

Great article by Hans Bader of The Competitive Enterprise Institute Blog. Excerpts:

"The federal government knew of deceptive advertising by General Motors well in advance, and tacitly approved of it. Only later did federal officials distance themselves from those deceptive claims, after they drew criticism from an inspector general, Republican members of Congress, and even some journalists at liberal newspapers. Not, however, before the Treasury Secretary himself had trumpeted GM’s deceptive claims, which the Treasury Department had plenty of time to review before GM made them.

Documents just released by the U.S. Treasury Department in response to a Freedom of Information Act request make this clear. They show that General Motors and the Obama Administration coordinated PR strategy regarding GM’s much-criticized ad campaign in 2010, in which the car maker misleadingly claimed to have repaid what it received from taxpayers. In those ads, GM’s CEO at the time, Ed Whitacre, boasted that GM repaid its government bailout loan “in full, with interest, five years ahead of schedule.”

In May 2010, the Competitive Enterprise Institute (CEI) filed a deceptive advertising complaint with the FTC, and GM shortly thereafter stopped running the ads. CEI also filed a Freedom of Information request with Treasury for documents on the ad campaign. Those documents were finally released late last month, after a year of delay – far beyond the 20-day legal deadline for responding to FOIA requests."

"More importantly, this so-called “repayment” was just a drop in the bucket compared to what GM has received from taxpayers. The federal government had 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” – stock worth far less than the billions the federal government injected into the company."

"Eventually, even columnists for liberal newspapers like the New York Times and San Francisco Chronicle ridiculed these false claims. Gretchen Morgenson of the Times noted that “the company simply used other funds held by the Treasury to pay off its original loan.” Kathleen Pender of the Chronicle noted that “GM repaid its government loan with other government money.” The conservative Washington Times noted that “General Motors Lost $3.4 billion” just before running the ad; “GM specifically used funds it received from the Troubled Asset Relief Program to pay off the government loan.”"