Taxpayer investment in GM, Chrysler has 'starkly improved,
Taxpayer investment in GM, Chrysler has 'starkly improved,' U.S. says
By CHRISSIE THOMPSON
Free Press Business Writer
U.S. taxpayers’ investment in General Motors, Chrysler and their two primary financing companies has “starkly improved,” but the U.S. Treasury’s conflicting goals may have hurt taxpayers’ ability to recoup money, the Congressional Oversight Panel said today.
The U.S. government invested $81.3 billion of the Troubled Asset Relief Program in the auto companies, as well as Chrysler Financial and Ally Financial – formerly GMAC.
Since September 2009, the Congressional Budget Office’s estimate of taxpayers’ likely loss on the investment has been cut in half, from $40 billion to $19 billion. That’s partially thanks to the recovery of $22.7 billion so far of the $50 billion invested in GM — $13.5 billion through the initial public offering in November.
Still, in a report released today, the Congressional Oversight Panel stopped short of labeling the government’s intervention a success. In fact, a final verdict is difficult because the Treasury has several conflicting goals, the panel said — saving American jobs, recouping taxpayer funds, getting out of ownership quickly and staying out of the companies’ management decisions.
“These are always tough decisions,” former Sen. Ted Kaufman, D-Del., who chairs the financial oversight panel, told reporters on a conference call on Wednesday before the results were released to the public. “This should have been clearly defined, which of these things is the highest priority … so we eliminate conflicts.”
For instance, the Treasury’s decision to sell about half its stock at a 26% loss in GM’s return to the stock market “greatly reduced the likelihood that taxpayers will ever be repaid in full,” but helped the government reduce its stake quickly, the report said.
Also, Treasury’s refusal to help broker the sale of at least part of Ally to GM last year led to the automaker’s purchase of AmeriCredit – now GM Financial – to bolster its sales to subprime and lease customers.
“AmeriCredit may ultimately compete against GMAC/Ally Financial and thus damage that company’s ability to repay taxpayers,” the report said.
On the whole, the panel said, the TARP auto aid increased the chances that any large American company could be considered “too big to fail” and disadvantaged “more competently managed automotive companies” that didn’t take federal aid, such as Ford.
Contact Chrissie Thompson: 313-222-8784 or cthompson@freepress.com
Read more: Taxpayer investment in GM, Chrysler has 'starkly improved,' U.S. says | freep.com | Detroit Free Press http://www.freep.com/article/20110113/BUSINESS01/110113008/Taxpayer...
By CHRISSIE THOMPSON
Free Press Business Writer
U.S. taxpayers’ investment in General Motors, Chrysler and their two primary financing companies has “starkly improved,” but the U.S. Treasury’s conflicting goals may have hurt taxpayers’ ability to recoup money, the Congressional Oversight Panel said today.
The U.S. government invested $81.3 billion of the Troubled Asset Relief Program in the auto companies, as well as Chrysler Financial and Ally Financial – formerly GMAC.
Since September 2009, the Congressional Budget Office’s estimate of taxpayers’ likely loss on the investment has been cut in half, from $40 billion to $19 billion. That’s partially thanks to the recovery of $22.7 billion so far of the $50 billion invested in GM — $13.5 billion through the initial public offering in November.
Still, in a report released today, the Congressional Oversight Panel stopped short of labeling the government’s intervention a success. In fact, a final verdict is difficult because the Treasury has several conflicting goals, the panel said — saving American jobs, recouping taxpayer funds, getting out of ownership quickly and staying out of the companies’ management decisions.
“These are always tough decisions,” former Sen. Ted Kaufman, D-Del., who chairs the financial oversight panel, told reporters on a conference call on Wednesday before the results were released to the public. “This should have been clearly defined, which of these things is the highest priority … so we eliminate conflicts.”
For instance, the Treasury’s decision to sell about half its stock at a 26% loss in GM’s return to the stock market “greatly reduced the likelihood that taxpayers will ever be repaid in full,” but helped the government reduce its stake quickly, the report said.
Also, Treasury’s refusal to help broker the sale of at least part of Ally to GM last year led to the automaker’s purchase of AmeriCredit – now GM Financial – to bolster its sales to subprime and lease customers.
“AmeriCredit may ultimately compete against GMAC/Ally Financial and thus damage that company’s ability to repay taxpayers,” the report said.
On the whole, the panel said, the TARP auto aid increased the chances that any large American company could be considered “too big to fail” and disadvantaged “more competently managed automotive companies” that didn’t take federal aid, such as Ford.
Contact Chrissie Thompson: 313-222-8784 or cthompson@freepress.com
Read more: Taxpayer investment in GM, Chrysler has 'starkly improved,' U.S. says | freep.com | Detroit Free Press http://www.freep.com/article/20110113/BUSINESS01/110113008/Taxpayer...
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