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The big news, especially around my neck of the woods:

The new, post-bankruptcy GM made a final $5.8 billion loan payment to the US and Canadian governments on Tuesday.

Two questions, however, emerge. How did General Motors (OTC:MTLQQ) pay it back? What about the $50 billion bridge loan? First, the bridge loan:

The payments however do not include much higher loans made to the company under its former guise, being slowly wound down through the bankruptcy process.

The US government, which provided about $50 billion in emergency loans, holds a 60.8 percent stake in the new company and $2.1 billion in preferred stock. The Canadian government and a retiree health care trust also hold significant stakes.

The expectation seems to be that the government will recoup the $50 billion when the company goes public later this year. However, GM’s market cap has never been $50 billion (let alone 60% of it).

Now to the issue of how the money was repaid via Jamie Dupree of the Atlanta Journal Constitution:

General Motors will make a big splash in the news today by announcing that the automaker will repay several billion dollars loans from the federal government earlier than expected. But it’s not really coming out of the GM wallet.

The issue came up yesterday at a hearing with the special watchdog on the Wall Street Bailout, Neil Barofsky, who was asked several times about the GM repayment by Sen. Tom Carper (D-DE), who was looking for answers on how much money the feds might make from the controversial Wall Street Bailout.

“It’s good news in that they’re reducing their debt,” Barofsky said of the accelerated GM payments, “but they’re doing it by taking other available TARP money.”

In other words, GM is taking money from the Wall Street Bailout – the TARP money – and using that to pay off their loans ahead of schedule.

“It sounds like it’s kind of like taking money out of one pocket and putting in the other,” said Carper, who got a nod of agreement from Barofsky.

“The way that payment is going to be made is by drawing down on an equity facility of other TARP money.”

Translated – they are using bailout funds from the feds to pay off their loans.

This is not quite the good news suggested by the headlines.

Source: Did GM Pay Back Its Loan? Sort Of