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Auto Bailout Loss Jumps to $25B

New Treasury report registers a 15% rise in predicted losses

By Kate Seamons,  Newser Staff

Posted Aug 14, 2012 7:58 AM CDT

(Newser) – The auto bailout just hit America's wallet about 15% more than expected. In its monthly report to Congress, the Treasury Department tacked another $3.3 billion onto the expected auto bailout losses, bringing the estimate to $25.1 billion lost on the $85 billion rescue. And the Detroit News warns that the number could tick higher. That's because the report's estimate ran through May 31, and things have gotten slightly gloomier since then.

GM's stock price, at $22.20 a share at May's end, closed at $20.47 yesterday. By the News' calculations, that would mean another $850 million loss on the GM bailout. To recoup its entire bailout of GM, the government would need to sell its 500 million shares in the company for more than double that price: $53 a share. The bailout loss estimate has been a bit of a rollercoaster: Though the White House's initial projection was that losses would hit $44 billion, in May 2011 the Treasury had pegged expected losses at $13.9 billion.

General Motors CEO Rick Wagoner travels in a Chevrolet Malibu Hybrid, second car at center right, Wednesday, Dec. 3, 2008, from Detroit to Washington to testify in a Congressional hearing on the auto industry bailout.
General Motors CEO Rick Wagoner travels in a Chevrolet Malibu Hybrid, second car at center right, Wednesday, Dec. 3, 2008, from Detroit to Washington to testify in a Congressional hearing on the auto...   (AP Photo/Gerald Herbert)
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COMMENTS
Showing 3 of 70 comments
LoginsSuck
Aug 14, 2012 10:55 AM CDT
It seems that the people who are against the auto bailout only look at it in terms of the $25 billion loss and are incapable of understanding the cost of lost opportunity or just how the complex web of consumers, suppliers, and business are intertwined. For those who can't seem to understand the full extent of how much the auto bailout helped the country as a whole, let me give you a little example. As if the crumbling city of Detroit is not enough to show you what happens when a major industry declines. Think of Kokomo, IN which is a city whose business was based on the auto industry (parts and vehicles). This city has had population decline since 2000, mostly in the recent years, even after annexing adjacent areas of up to additional 11,000 population. Several of the auto plants and part plants there closed except for the casting plant and two other Chrysler plants - which are running full time with 2/3 to 1/2 the number of workers needed. Delphi was also closed as it had not enough plants to supply parts to and many other auto related business closed due to loss of customers both commercial business and public people. People lost jobs, houses, and couldn't find other jobs to replace as the available jobs and business shrunk. Other business started to suffer because the loss of the customer base as a huge portion of  population lost jobs, moved, or barely made a living. More people were laid off which lead to more business loosing income. It's a vicious cycle - much like Detroit is going through. It affects every business at some level or another when people lose jobs and can't find jobs that make anywhere near what they were making. A huge amount of disposable income is gone and people cannot spend the same amount. Imagine if the remaining auto plants had closed. This city was just a few plant closing away from being Detroit. Now it is slowly coming back. This is just one city of the many that the auto industry closing would affect. It was said once that one out of 3 to 4 jobs in the US was related some way to the auto industry. Do you think the US could have survived if we lost 25-33% of jobs. How many of the remaining 75-66% businesses would have had to lay off workers because they lost 25-33% of their business. Business and industry are a interlinked web that will fall like dominoes if you remove a large portion of the spending. Sure the people who are not paycheck to paycheck are not worried. They have theirs already. The average American is one accident, lay off, or emergency away from being bankrupted and we don't have a generous severance package to tide us over until our retirement fund kicks in. 
B-Diddy
Aug 14, 2012 10:01 AM CDT
WTF??? And we the American tax payer are paying for this while they get rich again. The Government should Bail out the Education system!!!!!!
Diapercake
Aug 14, 2012 9:03 AM CDT
government try to make sun car but people not like sun car.  everybody in world jealous of big mean america car, but government make go cart as car with sun.   now listen, bank problem is not same as car make problem so govt should help bank but make them be careful next time or jail, but govt needs to not touch cars because employee who have pension+union does not care to try.
 

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