General Motors and Chrysler are profitable, healthy businesses cranking out some of their best products in decades. And they should be—the government intervention to rescue them from bankruptcy cost American taxpayers $9.3 billion.
That's the final number from the U.S. Treasury's Automotive Industry Financing Program, and amounts to all the money spent to float GM, Chrysler, GM's Ally Financial, and the companies' warranty commitments. All told, the federal government sent $79.7 billion to automakers between 2008, when President George W. Bush instated the Troubled Asset Relief Program at the end of his term, and 2014.
Excluding dividends in automaker stocks, loan interest, and other collected fees, the Treasury recorded a $16.6 billion loss, which was well below President Obama's initial estimate of $44 billion. Before he left office, Bush approved $25 billion in loans to GM and Chrysler. Obama then escalated TARP into federal takeovers of some of the country's largest private companies, allowing bureaucrats unprecedented power to control salaries, cut entire divisions (like Pontiac), and shape business plans.
"We've now repaid taxpayers every dime and more of what my administration committed, and the American auto industry is on track for its strongest year since 2005," Obama said at a press conference on Monday.
Strangely enough, it's true. The entirety of the $426.7 billion TARP bailouts—$332 billion of which went to banks and other financial institutions like AIG—has been repaid, and through gains on AIG stock, the Treasury is claiming a $15 billion profit overall. The automakers haven't done as well. When the Treasury sold its final GM stake last December, we were out $10.5 billion. When Chrysler paid its $5.1 billion loan back in May 2011, they left us with a bill for $1.3 billion. Luckily for the Treasury, the Ally Financial stock sale this month netted a positive $2.4 billion, and the warranty expenses—remnants from the pre-bankruptcy GM and Chrysler—brought in $120 million.
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GM and Chrysler have no plan to repay the loss and the Treasury has not indicated any attempt to recover the money. As for Ford, while it did accept a $5.9-billion federal loan in 2009 under the Department of Energy's Advanced Technology Vehicles Manufacturing program—the same program that saw Fisker fall to the Chinese—the Dearborn automaker is paying the funds back with interest.
from Car and Driver Blog http://ift.tt/nSHy27
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