This article by Gretchen Morgenson in the New York Times is significant for two reasons.  First, the Times has decided to give this significant coverage, which means the story of GM’s misleading claim of paying back the taxpayer-funded bailout will continue to have some legs. More importantly, it also points the finger at Treasury and the Obama administration for its complicity in allowing CEO Ed Whitacre to make those claims without challenge:

AS we inch closer to a clearer understanding of the products and practices that unleashed the credit crisis of 2008, it’s becoming apparent that those seeking the whole truth are still outnumbered by those aiming to obscure it. This is the case not only on Wall Street but also in Washington.

Truth seekers the nation over, therefore, are indebted to Senator Charles E. Grassley, Republican of Iowa, who in recent days uncovered what he called a government-enabled “TARP money shuffle.” It relates to General Motors, which on April 21 paid the balance of its $6.7 billion loan under the Troubled Asset Relief Program.

G.M. trumpeted its escape from the program as evidence that it had turned the corner in its operations. “G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,” boasted Edward E. Whitacre Jr., its chief executive.

G.M. also crowed about its loan repayment in a national television ad and the United States Treasury also marked the moment with a press release: “We are encouraged that G.M. has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability,” said Timothy F. Geithner, the Treasury secretary.

Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.

Scott Johnson at Power Line wonders when the Most Transparent Administration EverTM will investigate this attempt to play a shell game with GM’s bailout and steal a little political capital:

Whitacre and GM omitted two facts that render their public relations blitz highly misleading. They are the kind of omissions that constitute securities fraud when made by a company in connection with the purchase or sale of a security or when a company reports its financial results. …

GM’s fraudulent public relations blitz took place with the support of the Obama administration, up to and including Secretary of the Treasury Timothy Geithner. Geithner’s participation makes his tax cheating and related testimony pale in comparison.

In retrospect, it is obvious that GM undertook the blitz at the behest of the Obama administration. It is symptomatic of the era of national socialism in which we find ourselves, and for which GM is a leading indicator.

Scott makes a good point. This kind of misleading statement would be actionable under Sarbanes-Oxley had it been made as part of a disclosure statement. It might still yet be actionable if the SEC concluded that GM intended to mislead investors into buying GM shares the same way Whitacre wanted to encourage car buyers to come back to GM by falsely claiming that they had repaid taxpayers in full. However, that would mean that the SEC would have to investigate the role of the executive branch to which it belongs in the endorsement of Whitacre’s statement. Any investigation of this would have to originate in Congress, and they’re not likely to engage, either … at least not this year.

Update: I had the reporter’s name incorrect; it’s Gretchen Morgenson, not Morrison.  My apologies.