Taxpayers to Lose $14B in Auto Bailout Funds
Ron Bloom, The Obama Administration’s Assistant for Manufacturing Policy, reported yesterday on the status of the auto industry bailouts from two years ago. To date Chrysler has repaid all of its loans, and General Motors has paid back approximately half.
Bloom provided more detail: “The total funds invested, including the prior administration, into the industry is roughly $80 billion. Roughly $40 billion has been returned to date. The remaining money is accounted for by stakes in General Motors -- we’ve sold about half of what we own, but we still own the other half -- a small equity stake in Chrysler; and a stake in Ally Financial, which is the old General Motors Acceptance Corporation.”
The Congressional Budget Office’s latest estimate of the stock value indicates that out of the initial $80B, a $14B loss is expected. That figure rises when the value of the stocks decline. The Treasury Department reported that figure at $13.9B based on a March 31 stock price of $31.03. The Administration won’t announce when it plans to sell the stock for fear of disrupting prices, and won’t commit to selling at a target price.
General Motors stock price year-to-date has declined from a high of $38.98 on January 7 to its current price of $29.90.
When pressed further, Bloom stated that he doesn’t expect all of the money to be returned.
Bloom highlighted that all three US automakers have gained market share last year and are making profits. He admits some of this is due to recent troubles with the Japanese manufacturers, but clams most of the gains are due to “making better, fuel-efficient cars” that consumers want, and touted the Chevy Cruze, Ford Focus, and Chevy Volt as examples.
General Motors reported in April that the total sales of the Volt since it’s introduction in late 2010 was 2,029 units, ahead of the 1,044 sales of the competing Nissan Leaf. The Volt is a compact hatchback with a retail price of $40,280 and is only sold in select markets.