Shocker: TARP funds went to unworthy companies
Sit down, reader. A new Congressional panel report questions the need for the Treasury Department’s $17.2 billion bailout of GMAC, a global financial services company (formerly a part of General Motors) in 2008 and 2009.
The government “might have been able” to arrange a strategic bankruptcy for GMAC, as it did for General Motors and Chrysler, preserving its automotive lending arm while dealing with the mortgage lending operations that brought it down, the panel found.
In one passage, the report concluded that GMAC became “one of the five largest wards” of the government even though it was “a company that apparently posed no systemic risk to the financial system, that did not seem to be too big to fail, too interconnected to fail, or indeed, of any systemic significance.”
Shocking, I know. That is, until one remembers this:
GMAC has spent nearly $1 million during the first three quarters of this year to lobby the very federal government it’s begging for our greenbacks, a Center for Responsive Politics analysis finds. That’s on top of the $5.46 million it spent on federal lobbying efforts in 2008, shortly after it peeled away from former parent company General Motors — itself formerly bankrupt, bailed out by taxpayers and still on quite a federal lobbying clip. The U.S. House, U.S. Senate, Treasury Department, Government Accountability Office and Federal Deposit Insurance Commission are among the governmental agencies and entities GMAC has this year lobbied.
Check out how lobbying spending shot up in ‘08 when GMAC really needed that sweet taxpayer cash. [Image from Open Secrets]
And then there are the donations made to politicians from General Motors (which is ranked a “heavy hitter,” meaning a “heavy-spending donor” by the Center for Responsive Politics,) which owned GMAC until 2006:*
GM sold GMAC to Cerberus Capital Management, a private equity arm of Citigroup AKA another huge player in the world of lobbying and legal bribing.
Wait a second! So you’re telling me that if a company spends lots of money lobbying and bribing politicians, then those politicians shape policies that favor those companies??
Why, that seems absolutely crooked!
Spending around $7 million for a $17 million return doesn’t seem like the worst investment in the world. Actually, it seems like a pretty awesome deal. Too bad taxpayers can’t get in on that action.