- Category: National
- Published: Sunday, 03 October 2010 09:10
- Written by Douglas Beckett
- Hits: 1280
Contrary to claims by General Motors earlier this year, the company has now admitted that it did not repay its government bailout. In light of this new admission, the Competitive Enterprise Institute supplemented its May, 2010 complaint with the Federal Trade Commission by drawing the commission’s attention to this new information. CEI’s original deceptive advertising complaint to the FTC chronicled GM's misleading claim in a national TV ad that the company had paid back taxpayer bailout loans.
Then, last week, General Motors admitted to the Associated Press that it did not in fact repay what it received from the government, and that repayment of the bailout may take years:
It will take a couple of years for taxpayers to get back the billions they spent bailing out General Motors, but the company has a goal of returning the money, GM’s new CEO said Thursday. CEO Daniel Akerson told reporters that the government won't be repaid with the company's initial public stock offering, which could happen later this year, but couldn't answer more specific questions about the sale.
In its original complaint, CEI urged the FTC to investigate the 2010 GM ad campaign entitled "GM Repaid Government Loan Ahead of Schedule.” The ad featured GM’s then-Chairman and CEO, Ed Whitacre, declaring that “we have repaid our government loan in full, with interest, five years ahead of the original schedule."
The GM ad “gives the false impression that GM has used its own funds to pay back all the bailout money that it received from the federal government,” CEI explained in the May complaint. “In fact, GM has only repaid a fraction of those funds—barely ten percent. Moreover, GM apparently repaid its loan by using other federal funds.”
The public is harmed by such misleading claims, as consumers could be unfairly duped into a false, renewed confidence in the company, the original complaint explained. To make matters worse, the false claim was even echoed by U.S. Treasury Secretary Geithner.
CEI urged the FTC to investigate GM’s advertising claim, to “serve the American public on this issue of major consumer and taxpayer importance [and] “discourage other beneficiaries of government bailouts from falsely misrepresenting their status.”