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Government Has Lost $25 Billion on GM Bailout

Written by Gary North on August 15, 2012

The Obama Administration likes to say that the auto bailout money was good for the economy. But when the government has lost $25 billion out of $85 billion spent, it does not seem like a good business decision to the rest of us.

According to the Treasury Department report, the GM bailout will lose at least $25 billion. That estimate is up by $3.3 billion.

What’s that? You mean the Obama Administration has known the Government Motors bailout was a money-loser all along? It did if they read the Treasury’s previous reports.

But weren’t the loans paid back? Yes, but the loans to the company were only part of the story. The bailout made the U.S. government an investor in GM stock. That investment has been a loser.

The report may still underestimate the losses. The report covers predicted losses through May 31, when GM’s stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government owns 500 million shares. It needs a price of $53 to get back the $50 billion it paid.

The report did not mention the fact that GM was saved by stealing from the bond-holders. Bond-holders are supposed to be first in line when there is a bankruptcy. The Obama Administration demanded that bondholders take less. But GM’s bondholders were treated far better than Chrysler’s, who were forced to settle for pennies on the dollar.

The government cannot sell its shares until they reach $53. That was the original agreement.

The Obama administration initially estimated it would lose $44 billion on the bailout but reduced the forecast to $30 billion in December 2009.

But the recent estimates are not as optimistic as last year.

Let us not forget that Bush gave the companies’ finance units $25 billion in bailout money.

The Treasury also has put on hold an initial public offering initially planned for last year in Ally Financial Inc. because of market weakness. The government holds a 74 percent majority stake in the Detroit auto finance company as part of its $17.2 billion bailout and has recovered $5.7 billion.

This is in addition to the $85 billion bailout under Obama.

All in all, it was bad deal for taxpayers. But what does Washington care about losses for taxpayers?

Continue Reading on www.detroitnews.com

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4 thoughts on “Government Has Lost $25 Billion on GM Bailout

  1. and the iatolaovomit calls it a success……..LMAO

  2. Government Motors has a new TV ad (probably paid for by the taxpayers) which touts this year being the most successful in their history; yet, Eric Bolling on Hannity the other night, said their sales are down 42% this year so far!!! Who do you believe??? I tend to go with Eric!!

  3. richard holmes says:

    The government didn't lose anything. The tax payers were robbed of THEIR money. Sell GM to Ford. Ford can sell all GM cars as entry level disposable junkers. When all the cars are sold sstop production and sell all of GM as scrap.

  4. If you listen to the add it says it had the best year last year, 2011 not 2012. All car sales are down. Investments are just that. You may lose or you may gain. If the stocks go over $53.00 per share the Gov. sells and makes a profit. I would rather have the money go to GM then then to some Arab country to come back to us as bullets or bombs killing our troops.