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New Film Reveals the Reality of the Auto Bailout

“Live Another Day” – but at what cost?

by on Sep.12, 2016

Storm clouds over Detroit. At the depth of the recession, two of the three US makers went bankrupt.

The economy was collapsing more rapidly than during the Great Depression, and nowhere was that more apparent than in Detroit, where the Big Three automakers faced the very real prospect of going out of business – destroying a million or more jobs in the process.

Ford Motor Co. was able to survive by mortgaging everything; not only its factories, but even its Blue Oval logo. General Motors and Chrysler didn’t move fast enough to secure equity lines. They had to be salvaged with the help of the largest federally funded bailout in history. It broke precedent and, many would argue, broke the law. The rescue effort may also have saved the economy, according to its proponents.

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Was it good or bad? “It was something in-between,” contends Bill Burke, suggests Bill Burke. He’s a media industry veteran and co-producer of the new documentary, “Live Another Day,” which has received strong praise on the film festival circuit and which will open at theaters nationwide on September 16th.

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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. (more…)

Taxpayers Taking Bigger Hit on GM Bailout

Total rises to $11.2 billion after accounting error.

by on Apr.30, 2014

The government bailout of General Motors is going to cost taxpayers $11.2 billion: $826 million more than originally expected.

U.S. taxpayers are taking a bigger loss on the General Motors bailout package than $10.3 billion originally reported. Due to an accounting error, the loss is actually $11.2 billion, according to a report released today.

The Treasury Department reported an $826-million administrative claim had been written off on March 20. However, the claim, which has not been revealed, cannot be written off.

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The figure surfaced in a report by the Office of the Special Inspector General for the Troubled Asset Relief Program, which was charged with overseeing the federal government’s economic stimulus program. (more…)

Biden Praises Resurgence of Detroit Automakers

Vice President tours show floor after speech at auto show.

by on Jan.16, 2014

GM CEO Mary Barra shows Vice President Joe Biden the 2015 Chevrolet Corvette Z06 at the North American International Auto Show in Detroit.

Joe Biden heralded the U.S. auto industry’s recent success as the pay off on a bet made by two presidential administrations during a speech at the North American International Auto Show in Detroit.

“We bet on American ingenuity, we bet on you and we won,” Biden said. “How could we possibly walk away from the iconic industry of America?”

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During the speech Biden noted that by the collective actions of the Obama Administration, automakers and their workers saved the industry that accounts for more than 4% of the company’s gross domestic product. Biden lauded the makers for their vehicles. (more…)

GM CEO Akerson Rejects Repaying Government for Losses

“The die was cast,” said executive.

by on Dec.17, 2013

GM CEO Dan Akerson said the government took the same risks as other investors.

Soon-to-retire General Motors Chairman and CEO Dan Akerson has said thanks, but no thanks, to suggestions the now-profitable automaker should pay back the roughly $10 billion the U.S. Treasury is believed to have lost on its 2009 bailout of the then-bankrupt automaker.

Speaking at the National Press Club in Washington, D.C., Akerson told his audience that the government took a risk like any other investor – including those wiped out when GM filed for Chapter 11 protection.  And, the CEO stressed, the bailout was far less expensive than the tens of billions of dollars in lost taxes and other revenues that would have been lost if GM had gone out of business.

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“I would not accept the premise that this was a bad deal,” said Akerson, who plans to retire on January 15, when his protégé Mary Barra becomes the first woman CEO at a major auto manufacturer. “The die was cast” when the government decided to take shares rather than make its investment in the form of a loan, Akerson emphasized.

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US Treasury Sells off Final Shares of GM

“Government Motors” is now a completely private enterprise.

by on Dec.09, 2013

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

Call it “Government Motors” no more.  More than four years after it emerged from bankruptcy with the help of a $49.5 billion federal bailout that left American taxpayers holding the majority of the company the U.S. Treasury has sold off its final holdings in General Motors.

Wall Street traders have been reacting strongly to news that the White House was set to get out of the auto business, GM shares setting surging during Monday trading after last week topping the $40 mark since the maker’s November 2011 IPO.  Among other things, the maker will now be in a position to pay dividends on its common stock and to raise the pay of senior managers without first getting approval from the administration’s pay czar – limits enacted as part of the terms of GM’s bailout.

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“The U.S. Treasury’s ownership exit closes just one chapter in GM’s ongoing turnaround story,” said GM Chairman and CEO Dan Akerson.  “We will always be grateful for the second chance extended to us and we are doing our best to make the most of it. Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again.

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GM Bailout Saved 1.2 Mil Jobs, According to New Report

Feds to sell off last stake by month’s end.

by on Dec.09, 2013

Bailout "put food on the table for 10s of 1,000s," says GM Pres. Mark Reuss.

The federal government bailout of General Motors spared at least 1.2 million U.S. jobs, according to a new report – and even though taxpayers will lose more than $9 billion on the rescue effort, that was more than offset by nearly $40 billion in additional taxes generated in just the year the government pulled the beleaguered automaker out of bankruptcy in 2009.

The white House has been rapidly selling off its final shares in what critics have called “Government Motors,” and expects to be completely out of the automotive business by the end of this month.  The most recent Washington forecast indicated taxpayers could lose $9.7 billion on the bailout, though the rapid run-up in GM stock this past month could trim that loss, analysts note.

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“Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment,” declared authors Sean McAlinden and Debra Maranger Menk, in the study, “The Effect on the U.S. Economy of the Successful Restructuring of General Motors,” released today by the Ann Arbor, Michigan-based Center for Automotive Research, or CAR.

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Treasury Will Sell Remaining GM Shares by End of Year

Government expected to lose more than $10 billion on bailout.

by on Nov.21, 2013

General Motors is about to be completely government-free after the U.S. Treasury announced plans today to sell its remaining 31.1 million shares by Dec. 31.

The U.S. Treasury is fast-tracking its plans to sell off its remaining shares of General Motors to be completely divested by the end of this year. The government currently has 31.1 million shares remaining after recently selling 70.2 million shares for $2.56 billion, the Treasury Department said.

“If average daily trading volumes continue at recent levels, Treasury anticipates that it will complete the sale of its remaining shares by the end of the year. However, that schedule remains subject to market conditions,” the Treasury said in a statement.

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The government is likely to lose more than $10 billion. Treasury has already booked a loss of $9.7 billion on the sale of about 800 million shares of its stake. (more…)

U.S. Treasury Continues Sale of GM Stock in October

Government still tracking to lose nearly $10 billion.

by on Nov.13, 2013

The U.S. government now holds about a 4% stake in General Motors after selling off more stock in October.

The U.S. government’s steady sale of its remaining shares of General Motors stock continued last month, according to the Treasury Department, as it sold $1.2 billion of its holdings.

The government is still on track to lose about $9.7 billion on the shares, which it acquired in 2009 as part of the automaker’s bankruptcy restructuring. The final number won’t be known until all of the shares are sold, but the Detroit-based maker’s stock price would have to jump to more than $175 per share now for the government to break even.

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The Treasury has said it plans to divest the rest of its holdings by next spring and has been selling the stock in bits and pieces since this summer. (more…)

Buffett Boosts GM Holdings by 60%

Legendary investor rushes in as Treasury continues stock sell-off.

by on Aug.16, 2013

Warren Buffett just increased his GM stock holdings by 60% to 40 million shares.

Even as – and perhaps because of – the U.S. Treasury continues selling down its remaining stake in General Motors, billionaire investment guru Warren Buffett is rapidly increasing his own holdings in General Motors.

According to a federal filing, Buffett’s investment arm Berkshire Hathaway has increased its holdings in the giant Detroit maker by 60%. He now has 40 million shares, or 2.9% of GM’s outstanding stock.

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That news came just days after Treasury officials advised Congress they has sold off around 25 million more shares in GM for a total sale of $876.9 million. The federal government now holds just 136 million shares, a little more than a quarter of the 500-million-share stake it gained after the maker’s 2009 bankruptcy, in return for a $49.5 billion bailout. (more…)