Repaying Taxpayers With Their Own Cash

April 28 (Bloomberg) -- General Motors Co., which repaid $4.7 billion in U.S. loans last week, properly used escrowed cash for the payment, a Treasury Department official said in responding to complaints from a Republican senator.

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Allison said Grassley was incorrect in saying the escrow account was held at the Treasury, when the funds were held by the automaker.

GM Chief Executive Officer Ed Whitacre last week met U.S. lawmakers, including House Speaker Nancy Pelosi, in Washington after announcing the repayment. Taxpayers own 61 percent of GM, a stake worth about $2.1 billion, as part of its 2009 bankruptcy financing.

The Treasury will start selling its GM shares when the automaker begins an initial public offering, Allison said.

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The Most Important Financial Journalist of Her Generation
By Dean Starkman

This article appeared in the July 6, 2009 edition of The Nation.
June 17, 2009

On April 27, Lloyd Blankfein, chairman and chief executive of Goldman Sachs, sat down for a meeting at Goldman headquarters with Gretchen Morgenson, reporter, columnist and senior editor of the New York Times. The Wall Street titan and the Pulitzer Prize winner had never met, but this wasn't the usual polite getting-to-know-you session between reporter and source.

"I feel like I've been waterboarded," Blankfein told her, according to people familiar with the discussion. Blankfein was being dramatic, but he had reason to feel that way. It was Morgenson, after all, who had written the story this past fall that stripped the veil of secrecy from the most momentous closed-door deal in the annals of US finance: the government rescue of fallen insurance colossus American International Group. The September 28 story, "Behind Insurer's Crisis, a Blind Eye to a Web of Risk," was the first article published by a major news organization to reveal that the true beneficiaries of the bailout were the institutions to which AIG owed money, known as counterparties (mainly Wall Street investment banks). The 2,700-word piece said, among other things, that an AIG collapse "threatened to leave a hole of as much as $20 billion in Goldman's side" and that Blankfein attended a meeting at the Federal Reserve on September 15, the same day decisions were made to let Lehman Brothers fall and to save AIG.

Today this is common knowledge; until this story ran, though, it wasn't. The article was about as bold and valuable as business stories come and involved no small journalistic risks for the Times. Goldman, for instance, was able to wring a correction on the story and still feels wronged today. Treasury Secretary Timothy Geithner, who was then president of the Federal Reserve Bank of New York, called Morgenson and her editor to question the article's premise, The Nation has learned. The piece has been the subject of endless parsing on financial blogs and, privately, sniping by Morgenson's peers. Was Goldman really exposed to AIG? And if so, how? Was it fair to mention Blankfein's presence at the Fed?

It would be too much to say that the story was all in a day's work for Morgenson. It was extraordinary.

http://www.thenation.com/doc/20090706/starkman

Morgenson's articles have been described by Calculated Risk, a popular financial and economics blog, as "a noxious mixture of fact and hype, information and innuendo."

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