On 05/12/2011 12:03 PM, Travis wrote:
GAO Report: Taxpayers will not recoup all of the $62 Billion used to bailout GM & Chrysler
Scotty Starnes | May 12, 2011 at 1:31 PM | Tags: auto bailouts, GAO, GM, GM stock, Government Accountability Office, President Obama, taxpayers | Categories: Political Issues | URL: http://wp.me/pvnFC-5fHObama considers the taxpayers losing billions a success.
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(CNSNews.com)– As the Treasury Department seeks to extricate itself from the 2009 auto industry bailouts, it will struggle to balance being both an investor and a government agency, in the view of the Government Accountability Office (GAO).
A GAO report also notes that the Treasury will not likely recoup all of the $62 billion it spent to prevent General Motors and Chrysler from going through the normal bankruptcy process.
"Treasury's divestment strategy for its GM and Chrysler investments – including the timing of Treasury's exits and the extent to which it will recoup its investments – will depend on how Treasury balances its goals of maximizing taxpayers' return and exiting as soon as practicable," the May 10 report stated.
The government watchdog said the price of GM shares still owned by the Treasury would have to rise dramatically for the government to break even on the bailout – a development the GAO thinks is highly unlikely to happen in the near future.
"GM's share price will have to grow significantly for Treasury to approach fully recouping its investment in the near term," it reported. "GM's share price will have to increase over 60 percent from the IPO [Initial Public Offering] share price to an average of over $54 for Treasury to fully recoup its investment in GM."
The Treasury will therefore have to sacrifice one of its two main goals in managing the auto bailouts – protecting taxpayers and limiting involvement. GAO said that if the department hopes to at least break even on the deal, it will have to own GM stock for the foreseeable future.
"Treasury will have to temper any desire to exit as quickly as possible with the need to maintain its ownership interest long enough for the company to demonstrate sufficient financial progress."
In other words, the Treasury will either have to sell its remaining GM shares in the near term and lose taxpayer money, or remain a shareholder for longer in hopes that the share price rises enough to make back the original bailout.
Team Obama wants to unload GM stock before the 2012 election. He doesn't care if the taxpayers lose billionsas long as his union cronies vote for him.
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