U.S. government to lose $14 billion of auto bailout funds

by
June 2, 2011
Washington—The Obama administration said Wednesday that the government would lose about $14 billion in taxpayer funds from the bailout of the U.S. auto industry, a third of the loss that officials had initially estimated.

In a report from the president’s National Economic Council, officials said that figure was down from the 60% the Treasury Department originally estimated the government would lose after its $80-billion bailout of Chrysler and General Motors in 2009.

The report’s release coincides with the administration’s efforts to tout the bailout’s role in the revitalization of the U.S. auto industry after last week’s announcement that Chrysler Group was repaying $5.9 billion in U.S. loans and a $1.7-billion loan from the Canadian government. Those payments cover most of the federal bailout money that saved the company after it nearly ran out of cash and went through a government-led bankruptcy.

For Obama, the auto industry comeback is one of the few bright spots in an otherwise sluggish economic recovery. What’s more, the auto industry has a big footprint in key presidential battleground states like Michigan, Ohio, Indiana and Missouri.

General Motors Co., which also went through bankruptcy, received a $49.5-billion U.S. bailout. The federal government has lowered its equity stake in the company to 26.5% from 61% of GM after it sold part of the stake in November.

Ford Motor Co. did not seek federal government assistance.

“In the last year, the Detroit Three have all gained market share, they have all added jobs and they have all shown the ability to make money,” Ron Bloom, President Obama’s top adviser on manufacturing, said in reference to the three U.S. carmakers.

Bloom declined to say when the government would sell its remaining stake in GM.

 

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