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Government Lost $9.26 Billion Saving Auto Industry

Treasury made more than $2 billion on GMAC deal.

by on Dec.30, 2014

The Treasury exited GM more than four years after the maker's 2009 bankruptcy.

The U.S. government lost less than $10 billion rescuing the auto industry, which was four times less than some estimates.

The Treasury initially estimated the loss would be $44 billion, but revised it to $30 billion in 2009. Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper because interest and dividends paid isn’t applied toward the principal owed.

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The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments.

The biggest bath was taken on the deal with General Motors by putting up $49.5 billion, but recovering just $39 billion after the loans were repaid and stock sold. It fared better with GM’s former financing arm, GMAC, which is now known as Ally. The company was given $17.2 billion, but the government recouped $19.6 billion: a $2.4 billion profit.

With its help for Chrysler, it suffered a small loss: $11.96 given versus $10.67 returned. The losses were all on the stocks the government received as part of the deal. Overall, the government gave $79.69 billion to the industry to help it recover, but collected $70.43 billion, according to the Treasury’s report.

However, many called the money an investment in saving the country’s economy. Many experts predicted that the entire auto industry would collapse if GM and Chrysler had been allowed to simply collapse.

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A December 2013 study said failure of GM alone would have killed 1.2 million U.S. jobs, cut personal income by $79.5 billion and eliminated $17 billion in income taxes and Social Security taxes in 2009, according to the Detroit News.

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It could have also boosted government spending by $6.5 billion. Those figured do not take into account the impact the pensions from those two companies alone would have had on the Pension Benefit Guaranty Corp., the government entity that insures pensions.

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Overall, the Troubled Asset Relief Program (TARP), which is the deal that helped rescue GM and Chrysler, as well as dozens of banks and an insurance company, will make money overall. Treasury Secretary Jack Lew told reporters before Christmas, according to the News, the government invested $426.4 billion and recovered $441.7 billion.

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11 Responses to “Government Lost $9.26 Billion Saving Auto Industry”

  1. DWH says:

    How many dealers went out of business and nobody did anything ? This was a move by oems to rid their organizations of dealers that had paid off the capital assets and had such low overhead could always undersell the factory dealerships and metropolitian stores. Big Box marketing corporate Marketing.

  2. Rt says:

    at, while I agree a lot of dealerships went under, and by your tone I assume you are unhappy that they seemingly didn’t get a fair deal, which in some cases I very much agree with, think about it this way: how many dealerships big and small would have been decimated had GM and Chrysler been allowed to fail? I’m a small town guy myself, and I loved it when every little town with 200 people had a small Chevy dealership with a couple of new cars sitting in a gravel lot, but that business model was not feasible anymore. I’m just thankful that GM and Chrysler survived and are doing well, and that yhousands of their dealerships that did survive are thriving.

    • Jorge says:

      Sure there are some dealers who weren’t pulling their weight and may have deserved to be cut but there were also some very successful dealerships that were not as well “liked” by those in power at the time, even though they were as good or better dealerships than some that did not lose their franchise. If you’re going to terminate a franchise then you buy those companies out just like they had to buy into their franchise. You don’t use corporate mismanagement as an excuse to get out of jail free, screw over dealers, retirees and tax payers as GM and Chrysler.

      I’m thankful GM and Chrysler survived ONLY because they saved some U.S. jobs – NOT because they deserved to be bailed out after decades of mismanagement, incompetence, ignorance and cronyism. It does not appear that you are fully aware of all the unscrupulous and illegal activities of GM and Chrysler regarding the bailout LOANS that GM and Chrysler seem to think were FREE MONEY with no real terms and conditions.

      For GM to have the BALLS to use the money to expand in China and publicly announce that they were going to move as much of their U.S. operations including domestic U.S. engineering and design, to China is a disgrace and slap in the face to all loyal Americans who’s tax dollars bailed out the weasels in charge at GM.

  3. Walt Oshinsky says:

    Auto industry save America during WW2 by stopping car production and shifting to WAR machines – without that America would not exist – we would all be speaking German or Japanese

    • Jorge says:

      The auto makers were paid handsomely for their war efforts and ever since so they have a moral responsibility to repay the LOANS and not shortchange tax payers, retirees, franchisees, etc. What GM and Chrysler did is outrageous, unscrupulous and illegal, period. There is absolutely NO defense for their criminal acts.

  4. Jorge says:

    There was a ton of unscrupulous and even illegal dealings associated with the LOANS that were provided to GM and Chrysler. I supported LOANS, not free money, to retain U.S. jobs, many of which were still lost or intentionally exported for great CEO compensation.

    Not only did legitimate auto dealers lose their franchises, many retirees lost the benefits they had worked for all their lives and paid for. Then GM and Chrysler had the balls to not fully re-pay the LOANS and GM even spent the LOAN money to expand their business in CHINA. It’s just outrageous the crime that U.S. politicians and scheming companies get away with – all at tax payer expense. Everyone of these criminals should be convicted and sent to prison.

  5. Jim says:

    Money well spent when you consider to alternative and the billions it would have cost had these car companies fail. Could the loan have been done better, yea, but it is what it is.

    • Jorge says:

      Opinions vary. The criminals still owe the U.S. tax payers $9.2 Billion and they damn well should pay up. They also owe the retirees who lost retirement benefits and others who were cheated in the bailout LOAN program (- which was not meant to be a free lunch for GM and Chrysler), that Congress agreed to without any approval by the populace.

  6. DWH says:

    All Hail the Corporations! GM now sells more vehicles in china than the united states. Free enterprise has been saved in Communistic China. When Warren Buffet chain of dealerships starts selling chinese sourced vehicles keep in mind its all good when GM Fiat and Ford start closing more dealerships of course they will be probably selling chinese sourced cars anyway. Yea it always good to have to big to fail communistic united states err i mean capitalist united states!

  7. DWH says:

    Stalin was said to say that the capitalist would sell the rope to the communists to hang the capitalists. I wonder if he was talking of the Kochs brothers father? Or present day CEOs?

  8. Alleycat10 says:

    My answer on the GM bailout as well as that for Chrysler is never to buy their products again.