General Motors Is On Its Own…
Depending on interpretations of the free market economy, the federal auto bailout was either the darkest era of American capitalism or a shining moment of responsible leadership in Washington.
While that debate will rage on, government involvement in the auto industry came to an end this week when the Treasury Department announced it had sold its final shares of GM stock.
Though statements like “re-payment in full with interest” have been used relative to Chrysler and General Motors’ resolution of the bailouts, in reality there was a substantial financial cost.
After Chrysler paid the US and Canadian governments back some $5.9 billion ahead of schedule in 2011, allowing Italian giant Fiat to acquire controlling interest, the remaining balance of a total $12.4 billion in loans was converted to stock, on which there was a loss of about $1.3 billion.
On the $49.5 billion in loans to General Motors, US taxpayers lost between $10 and $13 billion, again mostly on the sell-off of stock.
And yet economists unanimously agree that these losses are dwarfed by the cost of the economic depression that the bailouts averted.
This George Polgar of GT Marketing for KYW News Radio