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One year ago, the U.S. auto industry was at the weakest point in its history. To make matters worse for the both the industry and the Obama Administration, the majority of Americans wanted nothing to do with a bailout, having just undertaken an even pricier propping up of the country's lending institutions. But President Obama and the Auto Task Force made the difficult decision to push General Motors and Chrysler through bankruptcy while providing $50 billion in loans to keep the doors open at the two companies. The administration estimates that the move staved off an estimated 1.1 million lost jobs, but the political and fiscal cost was high.

Last year, the Congressional Budget Office and the Treasury Department estimated that the U.S. government would likely lose $30 billion in the long term. The Detroit News reports that one year later there is a lot more optimism at the White House about the industry and our money. A five-page report released by the Obama Administration points to Chrysler's first quarter operating profit and the fact that GM paid off its government loans early shows that the auto bailout was a success. The report adds that "the contrast between where these companies, and the American auto industry, are today and the situation President Obama faced when he took office is stark." And that projected $30 billion loss? The latest projections by the Treasury Department and the DOT are for a much smaller loss of $8 billion.

The next step towards the U.S. government getting our money back comes when GM executes its initial public offering, which is rumored to be happening as soon as this June. Uncle Sam currently owns 60.8 percent of The General.

[Source: The Detroit News | Image: Jeff Swensen/Getty Images]


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    • 1 Second Ago
  • 72 Comments
      • 5 Years Ago
      That secret service dude to his left is so baller.
      • 5 Years Ago
      Great success, GM repaid bailout money taping into another pool of bailout money.
      • 5 Years Ago
      Damned if you do, damned if you don't.

      I think Americans would have been more upset, if both companies had gone into bankruptcy liquidation and assets sold off to BYD or Geely.
        • 5 Years Ago
        Expert can accurately predict, in hindsight, with specificity, exactly what would have happened if GM and Chrysler would have gone through a normal bankruptcy but couldn't tell any of us about the second biggest financial meltdown in this countries' history before it wiped out two trillion dollars in equity.

        Armchair Genius.

        Mom says your lunch is ready.
        • 5 Years Ago
        Why does it have to be one of those extremes?

        Valued properly, there are plenty of investors in the United States that would be interested in acquiring an auto manufacturer. Or heck, we could have just treated the situation like we do for banks, and sold GM's and Chrysler's assets to another automaker .... like Ford, since they didn't go bankrupt.
        • 5 Years Ago
        @Expert
        I actually think Ford would have survived-it might have had to do more desperate things to get a cash infusion to hold down the fort and would be in worse shape than it ended up being in for the short term but it likely would have survived since people who could see how lucrative it would be to have a stake in the sole surviving American automaker would likely have chipped in money. They would have had to have fire-saled all kinds of random stuff and likely have to have given away some equity but I think it would have been worth it.
        And while the suppliers might have been toast going bankrupt doesn't mean none of them would continue to exist-it'd be disruptive but basically Ford would just need enough money to hold out until enough suppliers were back online or they could source from their European or Asian (or even Mexican) suppliers what they can't get here. It would have taken a little while but sooner or later boatloads of new parts would have shown up from somewhere or another. Car companies now use suppliers from all over the world and sometimes have multiple suppliers making similar parts.
        • 5 Years Ago
        "Valued properly, there are plenty of investors in the United States that would be interested in acquiring an auto manufacturer. Or heck, we could have just treated the situation like we do for banks, and sold GM's and Chrysler's assets to another automaker .... like Ford, since they didn't go bankrupt."
        Umm...valued properly their value was severely negative and worth less than zero since their liabilities would have drowned anybody who was interested in purchasing an auto manufacturer-which is why Chrysler had to file for bankruptcy *AND* get bailed out before Fiat was willing to touch it.
        You're out of your mind if you think that BYD or Geely would have been dumb or frankly rich enough to have just bought the old GM with it's bajillion dollars in liabilities-there's a reason why GM and Chrysler had to file for bankruptcy even with the billions of money infused into them-their liabilities were so insanely huge that nobody could have afforded to bail them out without doing the bankruptcy. And as you can tell even then the government had to chip in money just to get Fiat to buy some of Chrysler.
        • 5 Years Ago
        Yeah, because Ford would have not only survived after all of it's suppliers closed their doors when GM/Chrysler went down, it would have magically not had everything leveraged to the hilt AND come up with enough cash to buy GM and/or Chrysler.

        If the government hadn't bailed out GM and Chrysler, Ford would have gone bankrupt. Most of the auto parts suppliers would have shut their doors, which would have caused a lot of problems for every other manufacturer, possibly causing them to go bankrupt as well. Most suppliers in the auto industry make parts for several different companies. If you think we could have just let GM/Chrysler file for bankruptcy and then wave our magic "FREE MARKET" wand and everything would be okay, you are delusional. We wouldn't have a domestic auto industry, and there'd be another 2-3 million unemployed people in the US as well.
        • 5 Years Ago
        @Dave
        "Valued properly, there are plenty of investors in the United States that would be interested in acquiring an auto manufacturer. Or heck, we could have just treated the situation like we do for banks, and sold GM's and Chrysler's assets to another automaker .... like Ford, since they didn't go bankrupt."

        That's... a very ignorant statement. I'm sure you didn't do it intentionally. Anyway, Credit Crunch happened. No bank will loan any investors any money to invest in failed auto companies. Shoot my friend that own a full paid off house and make close to six figure couldn't get a loan to buy another house.

        As for Ford buying it off, dude, they themselves had to sell off asset to save their own bacon. Why the hell would Ford go further into debt by buying failed auto companies? They sold Land Rover and Jaguar. I can't believe they sold their only profitable company at the time, Aston Martin. Then again Aston Martin was making so little in term of selling quantities. 2000-5000 Aston Martin Vantage a year so sexy. At least we don't have recycled Volvo parts in Aston Martin anymore.

      • 5 Years Ago
      All these bailout companies were huge, and had billions in assets that they could've sold to make due till they got back on their feet.

      Instead of bailing out corporations, they should have focused on the small businesses which actually support the backbone of the country. We use to be about the little man and supporting free enterprise, but now it seems that we are only about controlling and saving large companies to make a name for themselves.

      I mean, honestly, who would you rather be known as. Obama, Savoir of GM, or Obama, Savoir of Bill and Ethel's Auto Parts.

      I'm not a financial Guru by no means, but I would have done it different. What the entire Government needs in an infusion of some good old fashoined common sense, get the lawyers out of there and replace them with hard working farmers and construction workers. People who know how life works. Politicians are so spoiled that they have forgotten what it was like to work a day out in a field or have to get down right dirty and get a job done.

        • 5 Years Ago
        No thanks. I don't want a manual worker running the country - too far to the other end of the scale.

        Finding someone who understands big business, but has humble roots...that's the ticket.
        • 5 Years Ago
        Obama, like every other politician, will be known as savior of them that paid for his election.

        Obama 2008 was far and away the most generously funded political campaign in history. The UAW was a major supporter. They weren't going to be left out to dry.

        Mom and pop businesses don't host 6 figure fundraisers.
        • 5 Years Ago
        I agree that small businesses need more support as well, but the auto bailouts actually saved a bunch of small businesses. What about the ~6,000 GM dealers and the 1400 Chrysler dealerships? The hundreds of parts suppliers? All of the contract service providers that are paid by these companies? It's not just GM that would have gone down.
        • 5 Years Ago
        "All these bailout companies were huge, and had billions in assets that they could've sold to make due till they got back on their feet."

        That statement is False. While GM had a few assets, they had dramatically more liabilities. They had net Assets of NEGATIVE $91 Billion Dollars. They were in such bad shape they were worth dramatically less than zero. And they were losing money a rate of over 30 Billion dollars a year.

        http://finance.yahoo.com/q/bs?s=MTLQQ.PK

        GM was already "making due" with massive losses before the recession. Even with most of their debt wiped out, they still have negative net assets ($60 Billion of which are unfunded pension obligations that the government gets stuck paying for if they GM goes under).
      • 5 Years Ago
      IMHO if people are claiming the bail outs worked then GM wouldn't be losing money and paying back fed loans with other loans. I see GM has learned nothing over the last year. And btw the auto industry crumbled under Bush's administration. He left it for Obama to fix. Same with the banks, etc. Must suck to get left holding the bag and getting blamed for everything when your administration had nothing to do with any of it. He can only do so much and it seems what ever Obama does someone always has something negative to say. How about all these idiots who are against the bail outs come up with an alternative plan instead of sitting on their fat racists asses complaining about the spending he has to do to try and fix the situation. As another poster said it's a no win situation. Ok rant done.
      • 5 Years Ago
      And let the right wing nuts rant. GM pays the loan portion back but that just isn't good enough.

      Let the bizarre statements begin. Like they paid it back with TARP money. Really, where did that info. come from?

      The Community Reinvestment Act caused the meltdown. Something only a simpleton would suggest. The first homes to go into foreclosure in my area were the half million dollar homes the poor must have been buying.

      It would have helped if we wouldn't have listened to Bush and stormed Iraq to the tune of about a trillion dollars.

      When does Iraq pay us back?

      Oh, I forgot, that's something a Republican did and therefore good. Taking over a whole country and then rebuilding it isn't socialism, it's patriotic. Yet taking over an American company, representing less than .1 percent of the GNP, is socialism.

        • 5 Years Ago
        So true Kevin, so true.

        Just like the Arizona racial profiling bill. Republicans don't seem that concerned that they are empowering "the man" to take away the freedom of people who look hispanic. No need to worry because they are all white.
        • 5 Years Ago
        The last administration failed in Baghdad, so therefore Obama should get a pass on failing finance 101.

        That's a textbook example of the partisan fanaticism that has made Washington as dysfunctional as it is.

        Politics isn't two separate teams. We only have one country. We only have one government. When it does bonehead things we all pay the price.

        And blinders on ideologues who justify today's mistakes by pointing at yesterday's are the best possible way to ensure new mistakes to point at tomorrow.
        • 5 Years Ago
        @Think This

        Screw you, libtard. Do you live down here? I take it you don't. We have illegals sucking up resources in schools, overloading emergency rooms and getting hospitals closed, people getting killed...all the law does is have the police enforce laws ALREADY ON THE BOOKS.

        Would you move to Canada or something? I'm tired of East Coast Libs thinking they know how the world works.
      • 5 Years Ago
      Translation of the title into plain english : Other Industries And Other Workers Have Been Robbed.
      • 5 Years Ago
      "ANY loss is too much."

      We saved 1.1 million jobs at a one-time cost of $7,300 per job. How is that not a good thing?
      • 5 Years Ago
      In before anti-Obama comments.
      • 5 Years Ago
      How can Ford pay off it's 30billion dollar loan in the future but GM can't?

      I don't get it.

      And, who cares how long it take GM to pay US back. That's YOU and ME, not the USA government I'm talking about.

      So it takes GM 10-15 years to pay it all back, Who the F cares?

      I say don't do an IPO, keep GM "government private" until they do pay it off with zero profits till then.
      • 5 Years Ago
      Rick Wagoner should have put GM into bankruptcy long before begging the government for a handout. After Obama & Co. effectively owned GM, stockholders were wiped out and bondholders were stiffed so the UAW could take 30% of the company. A normal court bankruptcy would have been fairer to bondholders.

      GM had too many brands, a messy dealer organization, and had made promises to the unions that couldn't be kept. Bankruptcy was the only solution, but Wagoner was too weak to bite the bullet and do what needed to be done. Too bad, because the government shouldn't be involved.

      Unfortunately, Obama had to pander to his beloved unions which are largely responsible for killing the company in the first place.

      • 5 Years Ago
      They're just trying to brainwash you to think that way.
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