U.S. Government Lost $11.2 billion on GM Bailout
Joe Raedle/Getty Images
By Eric Beech

WASHINGTON -- The U.S. government lost $11.2 billion on its bailout of General Motors (GM), more than the $10.3 billion the Treasury Department estimated when it sold its remaining GM shares in December, according to a government report released Wednesday.

The $11.2 billion loss includes a write-off in March of the government's remaining $826 million investment in "old" GM, the quarterly report by a Treasury watchdog said.

The U.S. government spent about $50 billion to bail out GM. As a result of the company's 2009 bankruptcy, the government's investment was converted to a 61 percent equity stake in the Detroit-based automaker, plus preferred shares and a loan.

Treasury whittled down its GM stake through a series of stock sales starting in November 2010, with the remaining shares sold on Dec. 9.

At the time of the December sale, Treasury put the total loss at $10.3 billion but said it didn't expect any significant proceeds from its remaining $826 million investment in "old" GM, the report by the Office of the Special Inspector General for the Troubled Asset Relief Program said.

The U.S. bailout of GM and Chrysler, which received about $12.5 billion, saved 1.5 million jobs in the United States, according to the Center for Automotive Research.

Last week, GM posted its 17th consecutive profitable quarter. Earnings, however, were hurt by a $1.3 billion charge for the costs of various recalls, including for faulty ignition switches on 2.6 million cars.

GM is under investigation by the Justice Department, U.S. auto safety regulators and Congress over its failure to detect the faulty ignition switch for over a decade. The U.S. Securities and Exchange Commission is also investigating GM.


U.S. Government Sells Last Of Its GM Shares

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mac2jr

Unbelievable that we still have people in this day and age that believe that the crimes of the past were just and therefore, can be continued into today's world. Slaves are ok according to some here, and thus enslaving women, blacks, yellows, gays, and those not of their kind is ok, history proves it.

Grabbing people's land like the Canadians have done to many Americans with their Keystone Pipeline is appearently ok as well since history says that other cultures, and the pioneers of the America's did so, and thus deemed it as normal practice.

Teaching about history and its faults, criminal activities, seens to be a BAD thing to do according to some here, as it is a Liberal thing and was ok'ed by those that committed the crimes of the past.

As for Native America being hunter / gathers and killing each other in war after war, yes there were some tribes like the southwestern Apache that did this, but there are hundreds of tribes throughout the nation that were farmers, fishermen, and did NOT war, until the White Man tried to take over their land after breaking treaties, destroying forest, hunting game into extinction, and scalping the natives in order to 'earn' $100 payments per scalp.

Wake up America, WAKE UP!!! and learn your history and learn FROM your history..

May 01 2014 at 6:02 PM Report abuse rate up rate down Reply
mac2jr

"The greatest expansion in the history of the country was the settling of the West with little to no government oversight or intervention !"

Bank fraud, water wars, daily six-shooter killings, overgrazing leading to the worse dust storm in history, theft of mining claims, people dying of hunger and cold, lack of medical facilities, destruction of natural resources and forest, attempted private ownership of the Grand Canyon, the killing of millions of buffalo for fun, women working as near slaves or sex providers in many towns, claim jumping, total destruction of cities by fire, the stealing of Mexico's property by fraud and war, the stealing of Native America's property by fraud, war, and theft, the hanging of the innocent for trumped up charges or land theft, the wars between the cattlemen and the sheep herders, the bank robberies, the use of slave labor for building the railroads, and the rigged court systems did their jobs, right...

Wake up America, WAKE UP!!!

Much of our history in our country and the world is NOT one to be proud of, and is why we are disliked by about 5.8 billion people.

May 01 2014 at 2:12 PM Report abuse -2 rate up rate down Reply
itsmegp46

This cost to the Federal Gov't. is really chump change. Compared to the billions of dollars that would have been lost elsewhere. Then of course there are the two wars that Bush started which will eventually cost the US taxpayer between six and ten TRILLION DOLLARS, it really is chump change.

May 01 2014 at 11:02 AM Report abuse rate up rate down Reply
stupid_republicans

GM Bailout Saves 1.2 Million Jobs

In a new report released Monday, the Center for Automotive Research (CAR) reckons that the federal government bailout of General Motors Co. (NYSE: GM) saved 1.2 million U.S. jobs and preserved $34.9 billion in personal income and social insurance (Social Security, Medicare) payments. The bulk of those jobs and tax payments would have been lost in 2009 and 2010 and would have recovered (mostly) by now without federal intervention, but the U.S. auto industry would look considerably different had both GM and Chrysler been allowed to go under.

According to the latest monthly report from the U.S. Treasury, the federal government invested a total of $51 billion in GM, of which about $37.2 billion has been recovered as of October. The Treasury Department has already said it would divest its remaining shares of GM stock by the end of the year, which would add about $1 billion more to the amount recovered. That means that U.S. taxpayers lost about $11.8 billion as a result of the investment in GM.

Ford Motor Co. (NYSE: F) did not accept any federal bailout funds, but CEO Alan Mullaly said last year, “If GM and Chrysler would’ve gone into free-fall, that could’ve taken the entire supply base into free-fall also, and taken the U.S. from a recession into a depression. That is why we testified on the behalf of our competitors even though we clearly did not need precious taxpayer money.” Chrysler received $1.9 billion in federal funds before being taken over by Italy’s Fiat SpA.

What U.S. taxpayers avoided, according to CAR, was the loss of about $105.3 billion in transfer payments plus the loss of personal and social insurance tax collections to the tune of 768% of the net investment of $11.8 billion in GM and $1.9 billion (none recovered) in Chrysler. Including jobs related to the auto industry, the federal bailout preserved 2.6 million jobs in the U.S. economy in 2009 alone and $284.4 billion in personal income in 2009 and 2010.

As we have already noted, the CAR report suggests that many jobs would have been recovered eventually, but the gains would have been made mostly in the southeastern United States, where foreign carmakers like Toyota Motor Corp. (NYSE: TM) have been building manufacturing capacity. The CAR report notes that the results of such a migration would have had severe consequences in the long term and that unemployment rates in the upper Midwestern states would likely still be in double digits.

For the record, CAR gets nearly 80% of its funding from sources other than the auto industry. The full report on the effect of bailing out GM is available at the CAR website.

http://247wallst.com/autos/2013/12/09/gm-bailout-saves-1-2-million-jobs/

May 01 2014 at 10:34 AM Report abuse -2 rate up rate down Reply
stupid_republicans

Auto bailout saved 1.5 million U.S. jobs

Dec 9 (Reuters) - The federal bailout of General Motors Co, Chrysler and parts suppliers in 2009 saved 1.5 million U.S. jobs and preserved $105.3 billion in personal and social insurance tax collections, according to a study released on Monday.

The Bush and Obama administrations loaned the auto industry, including GM and Chrysler, which is now controlled by Italy's Fiat, $80 billion to avoid the collapse of the industry that they felt would result in the loss of millions of U.S. jobs.

Critics of the bailout at the time had argued the companies should be allowed to fail and the industry that resulted from the aftermath would be stronger. Treasury officials have repeatedly said the bailout was not an investment meant to turn a profit, but a move to save U.S. jobs.

The Center for Automotive Research (CAR) in Ann Arbor, Michigan, estimated in its study that the bailout saved a lot of jobs, even crediting for a rebound of the industry in 2010 after the initial fallout.

"Two consecutive executive administrations in Washington decided in late 2008 and early 2009 that the consequences of the potential losses and outcomes to the U.S. economy ... were worth avoiding through a federal intervention," Sean McAlinden, the center's chief economist, said in a statement.

"This peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history," said McAlinden, who wrote the study along with Debra Maranger Menk.

The U.S. Treasury has said it will exit the last of its stake in GM by the end of the month, clearing the way for the U.S. automaker to operate without the nickname "Government Motors" that executives said had hurt sales some.

GM North American chief Mark Reuss said on Monday that some consumers may consider buying from the automaker immediately after the government has exited its stake, especially where the company sells trucks.

Reuss said a huge psychological barrier will be lifted when Treasury sells the rest of its remaining 2 percent stake this month.

"This has been a long, hard road with no repeat customers and the label of Government Motors," he told reporters at an event outside Detroit.

He acknowledged some critics will highlight the money lost in the bailout, but pointed to the jobs, plants, towns, suppliers and related service industry jobs saved by the bailout under the Troubled Asset Relief Program (TARP).

"How do you put numbers on that?" he said. "I feel good about that and I'm not sure it was the same with the other industries that were granted TARP funds."

CAR estimated that a complete shutdown of the industry that was bailed out in 2009 would have resulted in the loss of 2.63 million jobs and those losses would still have stood at more than 1.5 million in 2010. If only GM had been shut down, the job losses would have been almost 1.2 million in 2009, shrinking to 675,000 in 2010.

http://www.reuters.com/article/2013/12/09/autos-bailout-study-idUSL1N0JO0XU20131209

May 01 2014 at 10:31 AM Report abuse -1 rate up rate down Reply
1 reply to stupid_republicans's comment
drbobdez

Glad to see that someone was curious enough about the facts to read the links I posted.

May 01 2014 at 12:16 PM Report abuse -1 rate up rate down Reply
michael

I wonder how many trillion $ we wasted in Irag and Afghanistan.

May 01 2014 at 10:02 AM Report abuse +3 rate up rate down Reply
ghelm92160

Doesn't matter as the government can just print more money unlike my ability as a taxpayer to print my portion of the loss!

May 01 2014 at 9:54 AM Report abuse +1 rate up rate down Reply
mac2jr

OMG, FOX is at it again... what a bunch of children, spoiled children...

May 01 2014 at 9:53 AM Report abuse -4 rate up rate down Reply
1 reply to mac2jr's comment
The Boss

Being a sheep, it must be pretty hard to hug all those trees, yes?

May 01 2014 at 9:59 AM Report abuse rate up rate down Reply
mac2jr

Government haters forget that they drive to work on government built roads and cross rivers on government built bridges, use fuel for their vehicles and homes harvested from government parks and forest. They forget that they vacation in government owned and operated parks and national forest. Forget that they are protected 24/7/365 by government FDC, FDA, CIA, FBI, NSA, ATC, organizations as well as government run military. Forget that their homes are protected by govenment fire and police departments, and forget that their educations were supplied by government run schools.

And yes, governments do make mistakes as we all do at one time or another, but we the people elect the government and should be working with the government in helping our people to more successful lives. GM was screwed by poor Corporate Management, and we the people did the right thing, we stepped in to help the workers that were losing their jobs, their homes, their savings due to the poor Corporate Management and Greed.

Wake up America, WAKE UP!!!

May 01 2014 at 9:52 AM Report abuse -1 rate up rate down Reply
1 reply to mac2jr's comment
Cody

And where does the government get their funding from?

May 01 2014 at 9:57 AM Report abuse +2 rate up rate down Reply
The Boss

The Government lost $11.2 billion my azz! We, the tax payers lost $11.2 Billion!! What a crock of crap! Guess we'll just have to work harder so the government can blow more of our money....

May 01 2014 at 9:47 AM Report abuse +6 rate up rate down Reply