Wednesday, September 09, 2009

Taxpayers to Lose Shorts on UAW Bailout

Ouch.

Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”

The prospect of recovering the government’s assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM’s case by next year.

The shares “will have to appreciate sharply” for taxpayers to get their money back, the report said.

(6) Comments
Posted by Owen at 1221 hrs
Economy + Politics + Politics - General

  1. For their stock to rise they would have to be profitable.

    Profit bad but ignorance good.

    With the Gov running it there are now worries about profit.

    Posted by .(JavaScript must be enabled to view this email address) on September 09, 2009 at 1353 hrs


  2. You say ouch, but I say that I’m glad we have the big health care issue in front of us to keep the government out the markets for a while.  Oh wait…....

    Posted by .(JavaScript must be enabled to view this email address) on September 09, 2009 at 1407 hrs


  3. Is it true that the Obama Health Care Bill contains a $10 billion dollar funding to restore the UAW’s health-care pension deficiency?

    Posted by .(JavaScript must be enabled to view this email address) on September 09, 2009 at 1531 hrs


  4. Everybody who is surprised by this say “Aye”.

    Anyone?

    Didn’t think so….

    Posted by .(JavaScript must be enabled to view this email address) on September 09, 2009 at 1743 hrs


  5. This really disgusts me.  That is a lot of money and a potential bottomless UAW pit…

    Posted by Smeety on September 10, 2009 at 0800 hrs


  6. Hard bargain?  Is that from a business perspective, or from a Socialist one?

    I don’t call turning the entirety of the $1.9 billion Debtor-In-Possession financing, as well as $3.5 billion of the original $4 billion loan, into debt held by Old Chrysler’s corpse that will never be paid back a hard business bargain.  I don’t call turning $40 billion of debt into 61% of New GM, which would make it worth $10 billion more than its peak market capitalization, a hard business bargain.

    As for paying it back, at least Chrysler paid back a bit over 10% given to it and Chrysler Financial ($1.78 billion out of $14.31 billion).  GM didn’t even pay back 1% of the money it got ($0.36 billion out of $49.89 billion).

    Posted by steveegg on September 10, 2009 at 1003 hrs


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