• Dec 10, 2009
2009 isn't quite over yet, but we're pretty sure most automakers would rather forget that it ever happened. And while General Motors and Chrysler suffered the pain and humiliation of bankruptcy and workers lost thousands of jobs and many plants and dealerships closed, the good news is that the General and the Pentastar are now more fiscally healthy than they've been in ages. The bad news is that it cost U.S. taxpayers an estimated $82 billion to save what has been called hundreds of thousands of jobs.

The Detroit News is reporting that after wading through the wreckage of the auto bailout, the Obama Administration only expects to get back an estimated $52 billion of its original investment. That's horrible news, right? Not so, says Gene Sperling, the senior counsel to Treasury Secretary Timothy Geithner. He said the $30 billion estimate is better than the $44 billion the government thought it would lose a few months ago. And with the perceived stabilization of the auto industry, Sperling feels the numbers could improve.

The DetNews reports that President Obama stressed during a speech on the economy that while the bailout of the auto industry wasn't politically popular, it was absolutely necessary to save "hundreds of thousands of jobs." The president then added "these were not decisions that were popular or satisfying; these were decisions that were necessary."

There are signs that at least GM will start paying the government back $6.7 billion as early as the end of the year. Chairman and interim CEO Ed Whitacre has reportedly intimated that the company could pay the money back in one lump sum. And once the auto industry is in a little better shape, the government could recoup much more cash when the General goes public. For the moment, though, Uncle Sam (e.g. the U.S. taxpayers) still owns 61 percent of the new GM.

[Source: The Detroit News | Image: Saul Loeb/AFP/Getty]


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  • 52 Comments
      • 5 Years Ago
      Government Motors is paying back $6.7 billion FROM the $41 billion in TAXPAYER cash they stole from the citizens WHICH IT STILL HAS IN THE BANKS! Government Motors isn't REPAYING anything. They are simply giving us money back - they haven't EARNED a dime in profit yet since bankruptcy so let's not congratulate them for RETURNING funds! Let's not forget that Government Motors screwed shareholders and bondholders and other creditors in the process of securing our money. So the total cost to America of this bailout is the cost of the loans PLUS all the debt that GM avoided that now is money lost to never see again!
        • 5 Years Ago
        As someone with a PhD in Economics, statements such as "Government Motors isn't REPAYING anything. They are simply giving us money back " are just plain dumb.

        Imagine the cost of letting GM fail. Hundreds of billions lost, a huge hit to our manufacturing base (we as a coutnry still have to MAKE stuff) and massive unemployment and ripple effects.

        Go back to driving your Camaccord and then bitch about the D3 needing assistance.

        Btw, W invaded Iraq because he WANTED to, not because we NEEDED to. Now that's a waste of money.
        • 5 Years Ago
        The money was taken by threat of force from "us". What do you expect, they spend it wisely? This is good news, actually. The sooner this government goes bankrupt and completely collapses the sooner people will finally get desperate enough to throw the criminals out, stop giving the crooks their money and learn to live off the teet.
      • 5 Years Ago
      Bailing out Chrysler was the mistake of the century.
        • 5 Years Ago
        Nah, it is bigger than that.

        The government deciding to "abandon the free market to save it", and now "spending ourselves out of a recession" (both R and D... none of them get a free pass on selling us down the river...)

        The government seizing the earned buying power of the US taxpayer is blatantly immoral at the levels they are doing it. WAY, WAY beyond what is necessary to fulfill constitutional mandates, and abide by constitutional limits on government.

        The government over-stepping their constitutional bounds is the mistake of both the 20th, and now the 21st centuries.

        Bailing out companies is not a role of government. Providing for the common defense is, not that the politicians have done that well, either.
        • 5 Years Ago
        Wrong buddy. Here is the mistake of the century. www.costofwar.com
        • 5 Years Ago
        Here is the clickable link

        http://www.costofwar.com/
      • 5 Years Ago
      "As someone with a PhD in Economics"

      That is as believable as Al Gore inventing the internet......
      • 5 Years Ago
      And these government people want to take over 1/6 of the US economy and "run" our health care! Yea, sure! Just as efficiently as the Post Office, Medicare, Medicade, the "war on poverty", Cash for Clunkers! Not getting my vote! And when do we get free cars, by the way, as a repayment? Put me down for a Regal...
      • 5 Years Ago
      now to see whether those "hundreds of thousands of jobs" saved was worth $82B...
      • 5 Years Ago
      Very good, why should we bail out the Auto Industry? We'll should let them go to hell. This way our loving tax payers could ALL buy foreign cars. This way the WHOLE country could join the Auto Industry. Now our loving tax payers would really have a better gripe when thery're in a soup line! If they could find one!
      • 5 Years Ago
      Basically $30 Billion for national security the way I see it. It would be very bad for the US to lose that kind of heavy manufacturing. Just imagine if there was another WWII scale conflict or a currency collapse. It is never good for any nation to rely heavily on imports.
      • 5 Years Ago
      "$82 billion"

      I hope that doesn't include any C4C money and putting that on Chrysler & GM shoulders alone since they benefitted from C4C the least.
      • 5 Years Ago
      What's $30B? It's not like we are in debt up to our ears or something.
        • 5 Years Ago
        $30B to save a hundred thousand jobs. How much are those guys getting paid to build cars and auto parts anyhow. That works out $300k a piece.
        • 5 Years Ago
        "The difference between the banks and the auto industry is that they have actually been repaying their bailout funds back in full"

        On the surface, it does seem that way. But remember that the auto industry can't double your interest rate on a whim, slash your available credit, or jack up fees in order to help pay back loans.

        Now if the feds could just start hiking up interest rates again, that would be great. Those of us who manage our money would like to start earning interest again thanks very much. ;)
        • 5 Years Ago
        Actually, Victor, in the case of Bank of America they're repaying the TARP funds and then taking out special low interest loans from the federal government. They're paying back the money that subjects them to special government scrutiny in exchange for more government money without the restrictions. (although the amount borrowed may not equal the amount of TARP funds that are paid back. Could be more, could be less.)

        In any case talking about the bank bailout moves us beyond the scope of Autoblog, so we should probably not continue this for much longer.
        • 5 Years Ago
        Nope John H., 12 billion to Chrysler. Arab Citigroup recieved a 45 billion bailout, did you know??? I don''t see many Wall Street press over that. Lets save the banks!!!
        • 5 Years Ago
        @Samurai Jack, I agree, this is about cars and no bank finances.

        @Kumar, mate I don't feel sorry for the people who took out loans they couldn't pay, or people who have had their interest rates 'jacked up' after missing a payment on their 10k bill or what have you. I sliced up my last credit non-department store credit card in 2003 and moved to save vs spend mentality. If more people didn't have champagne taste with beer pockets, the banks wouldn't have been able to capitalise on their own greed [that's the banks greed].

        This is really beyond autoblog's scope but I'll say this and leave it. Bush and his war aside, people keep solely blaming the banks for the economy when in reality the people themselves are just as responsible for the aforementioned reasons.
        • 5 Years Ago
        I'm assuming that $30B is the amount we gave to Chrysler.
        • 5 Years Ago
        "$30B to save a hundred thousand jobs. "

        Jake,

        The article said "hundreds" plural. Also, that is only the direct employees of GM/Chrysler. If they had gone under, many of their suppliers would have folded. Ford depends on many of those same suppliers and would have taken a major hit when it could not get parts. Then there is the general economic multiplier affect where the money that each employed person spends supports other people in other jobs. Its all a big web of dependency that ends up being a LOT more than a hundred thousand jobs.
        • 5 Years Ago
        @Mec: Saving the banks appears to have been a wiser decision than saving the auto industry - on financial level. The difference between the banks and the auto industry is that they have actually been repaying their bailout funds back in full... mainly so that they can hire a CEO w/o the interference of the gov's salary cap. Even so, in Aug it was reported that the profits from the 8 biggest banks who repaid their loans amounted to some 4billion, which isn't much in the grand scheme of things, but a profit is a profit.

        Further, Bank of America paid back it's 45 billion dollar loan this week and Citi will reportedly pay back it's loan next week. So shame on those 'Arab's' for giving he American people back their money.

        http://www.msnbc.msn.com/id/34350133/ns/business-us_business/
        http://www.nytimes.com/2009/08/31/business/economy/31taxpayer.html
      matthew
      • 5 Years Ago
      It's funny how many similarities there are in the policies of socializing industry, socializing healthcare, and socializing the banks to some kind of... oh I dont know... FACIST REGIME.

      The mentality of the people who backed the greed without productivity that got us into this mess is bad enough. Then to think that it can be fixed by bleeding the little bit of productivity left to cover for failure is insane!

      The automotive industry problem in the USA was simple. It was not competitive because they'd fallen decades behind, thanks to union greed stifling any meaningful research and development.

      Also, the unions allowed for the least common denominator of workers and managment to stay on. Quality control and reliability has been a joke. Like the guy who worked on the GM assembly line said "if a bolt was missing we'd ship the car anyway".

      The consumer is to blame for their ignorant and stupid buying practices. It's the same people who STILL buy things made in China after the exploding tire, lead paint, melamine toothpaste and poisoned pet food who are the type that kept buying GM products that sucked, and feeding the monster.

      It's simple common sense that if a company makes products that suck, you steer clear of them. For some reason people have this irrational concept of "brand loyalty".



      Bailing out the banks and the carmakers was the OPPOSITE of capitalism. Capitalism is the only economic system that produces real growth, and profit. Socialism and communism only loot existing money, and do not produce any growth. When people got the idea that they could trade debt, or make garbage cars but still get money for it, they did! They inflated an economic bubble that tried to burst.

      Bailing out the economy instead of letting the cleaning forest fire come through and burn off the dead wood, did more harm than good. It only postponed the inevitible collapse we're heading for now.

      It's like trying to pump up a tire that's got a 6sq/in. hole in the side with a tiny bicycle pump. That's all the bailouts are; a bicycle pump pumping the bubble up so it collapses slower than it would have.

      People think that the rich have enough money to loot from, so that they can bail everyone out. Well that's not true. Real capital only comes from productivity. When you tax and steal from productivity, it ceases and the economy collapses even further into oblivion.

      China has adopted a corrupted version of a capitalist system, most of Europe has as well even though they call themselves socialists, and so has most of the world.

      The USA is the only country I can think of that's going backwards. We had a system of productivity that worked, and we're sacrificing it to turn the USA into the ultimate socialist welfare state.

      We really need to elect better people, but the people elected are a representation of the public who voted them in.

      Maybe this just says that America is the new Rome: obese(66% and rising last time I checked), stupid(we import all our scientists now), incapable of production and totally capable of destruction. We're well on our way down the toilet.

      Instead of vomitoriums and orgy's we've got fast food chains and iPhones with unlimited porn. You'd think that if consumption induced happiness, these fat ****s would be the happiest people on Earth, but Prozac is still a hot seller in this great nation(even to pets. how sick is that?).

      We're doing great now, aren't we, Mr. Obama. Now where's all that changey wangey you've been going on about? This smells like the same socialism-disguised-as-patriotism BS that we've had forever. Who can loot America the most? Win a prize!

      Patriotism would be upholding the ideals that made America great, not pissing on them and defending the pile of trash that America has become.
        • 5 Years Ago
        @matthew
        TLDR:LOL
        • 5 Years Ago
        @matthew
        Luis - I've forgot more about this industry than you know.

        Shouldn't you be whining about SUV's or something?
        • 5 Years Ago
        @matthew
        tl;dr
        • 5 Years Ago
        @matthew
        You go Matthew, blame Obama for a situation he inherited from Bush. Spew that bile.
        Hurrah!
        • 5 Years Ago
        @matthew
        You'll see how much of a failure he is in 2012 when he kicks ass. I can't wait to see what you tools say when the economy is kicking, jobs are being created. You'll just come up with more "facts" (excuses) that Rush and Faux news spew.

        Now Glock, be a good troll and go back under your rock.
        • 5 Years Ago
        @matthew
        tranny-

        You have all the bases covered for your hero being a failure, don't you?
      • 5 Years Ago
      laser
      1:37PM (12/10/2009)
      Government Motors is paying back $6.7 billion FROM the $41 billion in TAXPAYER cash they stole from the citizens WHICH IT STILL HAS IN THE BANKS! Government Motors isn't REPAYING anything. They are simply giving us money back - they haven't EARNED a dime in profit yet since bankruptcy so let's not congratulate them for RETURNING funds! Let's not forget that Government Motors screwed shareholders and bondholders and other creditors in the process of securing our money. So the total cost to America of this bailout is the cost of the loans PLUS all the debt that GM avoided that now is money lost to never see again!

      -------------------------------

      Hey riceball, the feds owed GM many billions of dollars since WW-II they were never paid back. They should be paid double for the interest and for making the weapons that bombed those fricking ricers.

      You forget to mention the ricers stole almost 2 billion of USA tax dollars in the crooked C4C scam plus almost another 2 billion given to nissan by that lowlife obama

      Yet the japs still go out of their way in their own C4C in their country to assure NO American cars are bought there.

      Washington -- Dec 10th
      Detroit's Big Three automakers urged the U.S. government to take action over what they call Japan's unfair "cash for clunkers" program.

      In a letter to the deputy U.S. Trade Representative, General Motors Co., Ford Motor Co. and Chrysler Group LLC called the program "another example of Japan continuing efforts to discriminate against imported vehicles."

      The program makes "the vast majority of imports ineligible for the program's significant tax cut benefit, regardless of the vehicle's fuel efficiency."

      Advertisement
      Japan is providing up to a ¥250,000 ($2,830) tax cut for scrapping a car 13 years old or older toward the purchase of a new vehicle as long as it meets the 2010 fuel efficiency requirements and a ¥100,000 ($1,130) incentive for new vehicle purchasers who do not scrap a vehicle.

      While 87 percent of Japanese-built vehicles are eligible,
      no U.S. vehicles are eligible because of special import rules !

      Detroit's automakers noted that Japanese automakers exceeded their market share and enjoyed nearly half of the U.S. government's $3 billion Car Allowance Rebate System (CARS) program.

      In total, Japanese brands grabbed 319,300 out of a total of 677,000 sales in the month-long U.S. "cash for clunkers" program.

      "We urge the U.S. government to make clear that it cannot tolerate this outright discrimination, particularly at a time when it has provided substantial direct financial support for Japanese automakers in this market," the letter said from the Detroit Three's trade arm, the American Automotive Policy Council.

      Japan remains the most closed auto market in the industrialized world, U.S. automakers argue, with less than 5 percent of sales coming from imports.

      The Japan Automobile Manufacturers Association and the U.S. Trade Representative's office didn't immediately return requests seeking comment.

      Americans are getting fed up with the propaganda as this blob who tries and look like an American business that is registered in another country on the American OnLine (AOL)

      Rumor is since AOL was kicked to the curb as of today that this blog is going bye bye

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      • 5 Years Ago
      What a terrible waste of our tax dollars. They could've taken that $30B and given every single man, woman, and child in this country a $100 check and let US decide how to spend that money instead of bailing out overbloated and incompetent (i.e. FAIL) organizations.
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