U.S. reduces forecast of auto bailout losses to $17 billion

US President Barack Obama looks at the Chevrolet Volt

The Treasury Department projected a taxpayer loss of $17 billion on the bailouts of GM, Chrysler, and auto finance companies. That number is considerably lower than the last forecasted loss of $24.3 billion. This is the second time the forecast has been reduced since last year.

The 98-page report projected a total loss of $29 billion on TARP, the $700 billion fund that was used to bailout the auto, finance, and insurance industries. The report estimated a profit on its bank investments and a $5 billion loss on the bailout of AIG, as well as a more expedient exit from the auto industry than was originally anticipated.

The auto estimate was revised in light of an improved forecast for the government”s $17.2 billion bailout of Ally financial, the GM finance arm previously known as GMAC. Much more will be known however, after the government starts the process of divesting in GM, which is set to commence with the company”s IPO this coming November.

– By: Stephen Calogera

Source: Detroit News