At a recent campaign appearance President Barack Obama touted the alleged success of the federal government’s bailout of the automobile industry, saying it saved “more than one million jobs.” But while the auto bailout may have kept certain workers on the job, it has taken taxpayers for a ride — and the toll keeps mounting.
According to the Detroit News, the Treasury Department now estimates that the government will lose $25.1 billion on the $85 billion auto bailout. That’s an increase of 15 percent from its last quarterly forecast of $21.7 billion and of a whopping 80 percent from its May 2011 forecast of $13.9 billion.
Worse yet, Treasury’s “report may still underestimate the losses,” the News notes. The report only covers the period through May 31, but General Motors’ stock has fallen by $1.73 per share since then, to $20.47. “At that price,” says the paper, "the government would lose another $850 million on its GM bailout.” As the report noted,
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.
“Market weakness” is also hampering other bailout recovery efforts, reports the News. Last year, Treasury had planned an initial public offering (IPO) for Ally Financial Inc., a Detroit auto finance company in which it has invested $17.2 billion. That IPO has since been put off indefinitely, leaving taxpayers on the hook for the $11.5 billion Treasury has not yet recovered.
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