Detroit’s Big 3 bankruptcy would cost taxpayers four times more than bridge loans

According to a new study by consulting firm BBK and Michigan-based Anderson Economic group, a bankruptcy filing by GM and Chrysler would end up costing U.S. taxpayers four times more than the requested amount of the federal bridge loans.

BBK’s managing director and automotive practice lead, Kriss Andrews, said that the word “bankruptcy” or anything close to it scares consumers away not only from the company but the industry itself.

Anderson Economic Group and BBK put together a comprehensive analysis of the cost that taxpayers will be burdened with for the federal bridge loan compared to the cost of a bankruptcy declared by one or more of Detroit’s Big 3. The study was request by Detroit’s automakers.

The two firms said that bankruptcy would cost four times more than the requested loans. The study used $30 billion in loans and estimated that half of the amount would be returned to taxpayers within two years.

Source: AutoObserver