The administration will tell Congress on Wednesday that it expects to see a $30 billion loss out of the $82 billion that it shelled out in the form of government sponsored bailout loans of the American auto industry. The $30 billion forecast is down from earlier predictions that put that number around $44 billion.
The forecast went down as the auto industry picked up steam said Gene Sperling, senior counsel to Treasury Secretary Timothy Geitner. The administration says that it hope to see that number decrease even more and that the industry continues to improve.
President Obama defended the move as did Sperling, both noting that the amount of jobs saved in the bailout made the move a courageous one.
All but $6.7 billion of the $50 billion loaned to GM has been swapped for a 61 percent majority stake in the company. The stock price however would have to be much higher than it is now by the time the company plans to go public in order for the public to make their money back. GM is expected to make a $1 billion payment towards the aforementioned loan on December 31.
Much of the $12 billion loaned to Chrysler has been forgiven, though new parent company Fiat SpA is required to repay $6 billion of the loans before they can acquire a majority stake of the company.
“We also took steps to prevent the rapid dissolution of the American auto industry, which faced a crisis partly of its own making, to prevent the loss of hundreds of thousands of jobs during an already fragile time,” Obama said in a speech on the economy today. “These were not decisions that were popular or satisfying; these were decisions that were necessary.”
– By: Stephen Calogera
Source: Detroit News