One of the first items that the Obama Administration was to re-engineer the Auto Bailouts of General Motors and Chrysler to the tune of 10s of billions (after Bush gave them billions more). The reason was “jobs, we have to save these jobs!” never heeding the cries of the opposition that the American capitalistic system of Creative Destruction would slurp up the various parts during regular regular bankruptcy proceedings (yes, at bargain basement prices) and repurpose them under new management – and probably under new labor agreements. And that showed us the first face of the Obama Administration is subverting the Rule of Law in going around the normal process, screwing over the bondholders, shareholders, and (now former) auto dealers to protect Labor Unions. And now in the final tally, as many of us had said at the time, the American Taxpayer:
Federal government lost $9.26B on auto rescue
Washington — The U.S. government lost $9.26 billion on the auto industry rescue, according to the final accounting released late Monday. In its report, the U.S. Treasury Department said it recovered $70.43 billion of the $79.69 billion it gave to General Motors Corp., Chrysler LLC and auto lending arms Ally Financial Inc. and Chrysler Financial. The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. The books are closed on the program because the Treasury, on Dec. 19, sold its final 11.4 percent stake in Ally, the Detroit-based auto lender and bank-holding company formerly known as GMAC. The bailouts began in December 2008 under President George W. Bush with $25 billion in aid to GM, Chrysler and their lending arms. President Barack Obama added about $55 billion to the total.
“We’ve now repaid taxpayers every dime and more of what my administration committed, and the American auto industry is on track for its strongest year since 2005,” Obama said at a press conference that day.
And we see Obama’s “math” at work as well – not so fast, Sherlock:
Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper on the auto bailout. As tallied under those rules, taxpayers lost more because interest and dividends paid by borrowers — in this case, the automakers and finance companies — aren’t applied toward the principal owed.
…The government recouped $19.6 billion on the $17.2 billion Ally bailout — $2.4 billion more than it invested. But it recovered just $39 billion of the $49.5 billion given to GM; and $10.67 billion of the $11.96 billion that went to Chrysler.
A few posts on the idea of “It’s not mine to give” here, here, here, here, here, and here.
