How to Pay Your Mortgage with a Credit Card

The US Federal Trade Commission might sue GM over claims of paying back their loans in full. Despite claims made by Chairman and CEO Ed Whitacre in recent TV ads, General Motors is using taxpayer money, not operating income to repay government loans. Here are the details.

http://www.foxnews.com/politics/2010/04/23/gm-hot-water-ftc-truth-advertising/

* GM received $49.5 billion — $14.5 billion pre-bankruptcy and $30.1 during bankruptcy.
* Of the $30.1 billion, the $16.4 billion was placed in an escrow account.
* $2.8 billion in the escrow account was used to resolve Delphi’s bankruptcy reducing the escrow account to $13.7 billion.

In return, the government received:

* 60% stake in the new GM.
* $7.1 billion in interest bearing debt ($0.4 billion was paid back in July 2009).
* $2.1 billion of preferred stock.

GM used TARP money that was placed in escrow by the Treasury Department to repay the remaining interest bearing debt of $6.7 Billion. In other words, the Treasury approved the repayment of the loan with the escrow fund, which is similar to using credit cards to pay the monthly mortgage.

The government hopes to recover the remainder of their investment by selling common stock after GM’s initial public offering that is intended to take place later this year.