The Headline Screams : “Treasury: U.S. to lose $25 billion on auto bailout”
Is this wise or prudent business practice ?
Is subsiding one larger operations or operations a wise idea – or rather should you the US auto industry be punished for its largesse and the US government / Canadian politicians who allowed abuse of the companies in the process on following international trade. Or is a Chevrolet or Buick still a good car from a well managed company ? Add in a GMC U.S. made truck to that marketing mix.
Its not unlike the “too big to fail“ banks in the financial and financial service industries. Yet when issues arise the whole scenario is now a case of extortion to the rest of the banking system and financial blackmail.
In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.
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 still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.
The steep decline in GM’s stock price has indefinitely delayed the Treasury’s sale of its remaining 26 percent stake in GM. No sale will take place before the November election.
Treasury spokesman Matt Anderson said the costs were still far less than some predicted.
“The auto industry rescue helped save more than one million jobs throughout our nation’s industrial heartland and is expected to cost far less than many had feared during the height of the crisis,” Anderson said.
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.
The Treasury Department said in a May 2011 report that its estimate of auto bailout losses was $13.9 billion. The Congressional Budget Office also estimates a $14 billion loss. The CBO has written off $8 billion of the government’s auto bailout as an unrecoverable loss.
Republican presidential candidate Mitt Romney has decried the losses on the auto bailout and insisted that forcing GM and Chrysler Group LLC to go through bankruptcy first would have saved taxpayers money.
But President George W. Bush — who gave the automakers and their auto finance arms about $25 billion in his final weeks in office in bailout funds — said there wasn’t time.
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.
GM CEO Dan Akerson told employees at a town hall meeting Thursday that the company was working to take actions to boost the automaker’s sagging price. download Google Chrome here Click here for Mozilla Firefox& adobe acrobat Adobe Reader X (10.1.4) (48.49 MB) Your system: Windows XP SP2 – SP3, English