Treasury Department OKs GM's use of TARP funds for loan repayments
Senator Charles Grassley of Iowa questioned General Motors' use of escrow funds to repay its United States and Canadian bailout loans, but the United States Treasury Department has cleared the automaker's name of any wrongdoing.
Grassley called the automaker's repayment "nothing more than an elaborate TARP money shuffle" - as the escrow was originally funded but the TARP fund - but the Treasury Department has clarified the situation. Grassley was under the impression that GM's TARP funds were being held by the Treasury, when in fact the automaker had possession of the money.
Essentially a rainy day fund, the cash was being held in case GM came across any "extraordinary" expenses. No such circumstances have come up since GM's exit from bankruptcy, allowing the automaker to repay the bailout loans with the money in the escrow.
The Treasury Department still owns a 61 percent share in the company, but hopes to exit its ownership once GM begins an initial public offering.
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