US Treasury: Over $9B Lost In Auto Industry Bailout
The final tally is in: American taxpayers lost $9.26 billion from the Bush II/Obama-led rescue of the U.S. auto industry.
The Detroit News reports the loss comes out of a total investment by the U.S. Treasury of $79.69 billion used to bail-out General Motors, Chrysler Group, Ally Financial and Chrysler Financial. The department recovered $70.43 billion in profit through share sales, loan repayments, dividends and interest.
The reported final figure comes on the heels of the Treasury’s sale of its last 11.4 percent stake in Ally, the automotive lender and bank-holding company formerly known as GMAC Financial. Accounting rules, however, state the government — and thus, the taxpayers — lost $16.56 billion on the bailout, as interest and dividends paid by those rescued were not applied to the principal owed.
The $9.26 billion lost was much lower than the $44 billion projected early in 2009, as well as the $30 billion predicted later that year. Per the Center for Automotive Research and others who supported the bailout, the loss was much preferable over the total collapse of GM and Chrysler, with the former stripping the industry of 1.2 million U.S. jobs, $17 billion lost in Social Security and income taxes for 2009, and $79.5 billion in personal income tossed into the fireplace.
While the government is now out of the automotive business, it still has a small presence in the finance industry: out of 700 institutions who were accepted into the $700 billion Troubled Asset Relief Program in the early days of the Great Recession, 35 are still in the program today. $426.4 billion was invested overall, with the government recovering $441.7 billion; accounting rules, however, state the Treasury has taken $35 billion in losses.
Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.
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On the key of the treasury seal, that script T inside a rectangular solid block would make a nice auto emblem. "Introducing a new wave of automotive luxury. Talisman, by the Lincoln-Packard Motor Co."
I don't really see that much depreciation on any vehicle I own because I keep them at least 10 plus years. After I am finished with a vehicle it doesn't really matter what it is worth because I have more than gotten my money's worth out of it.
Little off topic, but I wonder what would happen if GM moved its HQ and North American production to Texas or another southern state? It would help win over some of the "refuse to buy GM because of the bailout" crowd. Might make production and labor a bit cheaper too. Not sure if their current labor contracts keep them from making such a move or not. Back on topic, as much as I hate admitting it the bailout probably helped more than it hurt. It sets a terrible precedent for any failed, beggar corporation with a politician in their pocket and both hands outstretched to exploit. It was an evil, but a necessary evil. Still there should have been some better strings attached: 1. The bailout would occur on the condition that another bailout would be strictly prohibited. You get this ONE chance to fix yourself. 2. A percentage of manufacturing must take place in the United States. 3. A percentage of all parts must be American made. 4. Salary cap for all executives. (Some blue meat for our left leaning friends.) I'm sure some of you could think of better strings, but I'm sure most of you agree that the bailout was more of a handout than a loan. if you're going to come begging to the American taxpayers, you better be prepared for some quid pro quo. It's the elected officials' fault for not demanding more in return and our own fault for electing them.
Agree DeadWeight hit them where it hurts, but usually the dealers get some extra hold back money so they don't come out entirely losing which is fine by me as long as I get a deal. That happened when I bought my Isuzu the dealer was able to reach down and lower the price some more. True if I didn't keep my vehicles so long I would lose on depreciation but I knew that I would be keeping the Isuzu at least 10 years so not that much to lose when you get a good enough deal especially when you get a 31k vehicle for 21k with heated leather seats, cruise, towing package, crew cab, 4x4, fog lights, and auto dim mirror. Six and a half years later I do not regret my purchase. In the case of my Isuzu it was the fully loaded model that had the best discount and the cheaper models moved fairly fast.