Taxpayer loss on GM takeover now at $25 billion
Auto Bailout—Epic Fail for taxpayers
Now it is official. The federal government is set to lose more than $25 billion on the $85 billion auto bailout, up 15 percent from the last estimate.
The Treasury Department’s most recent report to Congress says the loss will be $25.l billion. That is a $3.3 billion increase over last quarter’s estimate.
The rising and stubborn loss can be placed right at the front door of General Motors. In spite of President Obama’s constant claims, GM is no longer the number one automaker. It is not a healthy company.
GM lost the number one spot at the end of the first half of the year when Toyota regained the spot. Toyota relinquished the spot after the devastating earthquake and tsunami that struck Japan last year. Now Toyota is back on top with sales that have outpaced GM.
The real sticking point is GM’s falling stock price. When the federal government bailed out GM and the United Auto Workers it took a chunk of stock in payment. The government still owns 26 percent of the company.
With 500 million GM shares on its hands, the government would need to sell the stock at about $53 a share to recover its investment. GM shares are now priced at about $20 a share.
Out of necessity, the Treasury Department has postponed sale of its GM shares and no sale is expected before Election Day.
When GM hit the skids, the Bush Administration poured in $25 billion before leaving office. Then came the Obama Administration and more government cash arrived.
Rather than go through ordinary bankruptcy, President Obama concocted his own GM bankruptcy scheme. He bought into the company and banked on healthy GM stock to pay back the debt.
Now GM stock is in the tank and taxpayers are right in there with it.