| Advertisement |
DETROIT, Dec. 9 (UPI) -- American taxpayers are no longer part-owners of General Motors, Treasury Secretary Jack Lew said Monday, but they took a financial hit saving the automaker. The Treasury Department announced it has sold all of the remaining shares the federal government held in GM common stock it acquired during the bailout of the U.S. automaker during the recession. The stock sale came as the department winds down the Troubled Asset Relief Program.
Advertisement
GM, on the verge of collapse after the financial crisis struck in 2008, took a $50 billion bailout from the federal government, which it used as it reorganized under federal bankruptcy protection. U.S. taxpayers recouped $39 billion, the Treasury Department said, meaning taxpayers took an $11 billion loss to keep the Big Three automaker alive.
"The president's leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression," Lew said in a statement. "With the final sale of GM stock, this important chapter in our nation's history is now closed.
"The president understood that inaction could have cost the broader economy more than 1 million jobs, billions in lost personal savings, and significantly reduced economic production. As a result of his efforts, which built on those of the previous administration, more than 370,000 new auto jobs have been created, and all three U.S. automakers are profitable, competitive, and growing."
The Treasury Department said it has recovered a total of $432.7 billion on all TARP investments, showing a small profit from the $421.8 billion handed out in bailouts.
The Center for Automotive Research Monday confirmed Lew's statement that the GM bailout saved about 1.2 million jobs.
The report on the GM bailout, titled "The Effect on the U.S. Economy of the Successful Restructuring of General Motors," also concludes that $39.4 billion in taxes would not have been generated if the company had been allowed to go under, the Hill reported.
"Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment," study co-authors Sean McAlinden and Debra Maranger Menk said.
"If the U.S. government had refused to assist [GM and Chrysler] ... in a financial crisis of unprecedented proportions, then the whole U.S. economy was operating without a safety net, with the exception of course, of the banking system," the study says.
The car company bailouts have proven to be a political football, the Hill noted. First put together by former President George Bush, the bailouts were managed by the Barack Obama administration.
For some, the bailouts run against the grain, as they can be described as a government interfering with the natural course of event in the business world.
One of the more famous complaints was an op-ed article published in the New York Times that was written by Republican presidential candidate Mitt Romney. It was titled, "Let Detroit Go Bankrupt."
Romney later complained that he did not write the headline.
Romney said he favored a "managed bankruptcy." That was countered by Democrats who contended there was no entity, except for the U.S. government, that was big enough to rescue GM during a recession.
