GM to repay billions in federal loans before deadline

Wednesday, April 21, 2010; A12


GM to repay billions before federal deadline

General Motors is expected to announce Wednesday that it will pay off $5.8 billion in government loans ahead of the June deadline, according to sources familiar with the plans.

The Detroit automaker will repay $4.7 billion to the U.S. Treasury and $1.1 billion to the Canadian government. It has already repaid $2.3 billion on both loans.

The company is describing the early repayment as a sign of its rebound. Earlier this month, GM announced that it had lost $4.3 billion during the second half of 2009, but the automaker said it could turn a profit this year. Supporters seized on the news to bolster their case in favor of the government bailout of the company.

"Today's news shows that supporting our auto industry and the millions of families whose jobs depend on it was the right thing to do," said Rep. Gary Peters (D-Mich.).

It will probably take years, however, before the government can get back the $50 billion it has put into GM. Even after the loans are repaid, the Treasury will continue to own about 60 percent of the automaker. The United States cannot sell its equity stake until the company has an initial public offering of stock.

-- Peter Whoriskey


-- Fed official cautions on regulatory overhaul: Financial overhaul legislation now being considered could undermine the effectiveness of the Federal Reserve, said Charles Plosser, president of the Federal Reserve Bank of Philadelphia. In a letter to lawmakers posted on the Philadelphia Fed's Web site, Plosser said that stripping the Fed of the responsibility for supervising all but the largest banks could entrench the "too big to fail" problem and make the central bank less attuned to economic developments around the country. But he also argued that it could make sense to "curtail or eliminate" the emergency Fed lending authority that the central bank used in the bailouts of Bear Stearns and American International Group.

-- Apple's profit soars: Apple reported a sharp increase in its second-quarter profit, blowing past Wall Street expectations and sending its shares to an all-time-high above $258 in after-hours trading on Tuesday. The company said net income rose to $3.07 billion, up from $1.62 billion in the 2009 period. Record iPhone sales helped revenue rise nearly 48 percent, to $13.5 billion.

-- From news services and staff reports

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