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WASHINGTON — The Treasury Department has narrowed its projected losses on the bailout of General Motors, Chrysler and auto finance companies to $17 billion, The Detroit News reported.
But the final tally of government losses won’t be known for years until the government sells its entire stakes in General Motors Co., Chrysler Group LLC and Ally Financial Inc.
Still, the new estimate is a significant decline from the most recent projection of a $24.3 billion loss the Treasury reported during the summer. The loss was initially projected at $44 billion in 2009 and dropped to $30 billion by the end of last year.
White House Press Secretary Robert Gibbs described the lower projected auto figure as a “slight loss,” but didn’t disclose the number.
“Even as the accounting might note a slight loss, what it doesn’t certainly take into account is what would happen in Michigan, Ohio, Wisconsin, Pennsylvania if you had a million more people out of work,” Gibbs said.
The government infused nearly $86 billion into the auto industry — including a $5 billion fund to guarantee payments to auto suppliers that has since been repaid in full.
The Treasury injected $50 billion into GM and took a 61 percent stake in exchange for about $43 billion of the loan. The government also invested $12 billion in Chrysler and holds a 10 percent stake.
Overall, taxpayers are projected to lose $50 billion on the Troubled Asset Relief Program, the $700 billion fund used to bail out banks, the auto industry and insurance companies. That loss could fall to $29 billion, based on the value of the government’s other investment in AIG.
In total, the government used $475 billion of the $700 billion fund. The report predicts a $16 billion profit on its bank investments and a $5 billion TARP loss on its AIG bailout. It also is using about $46 billion to help some homeowners avoid foreclosure.
The 98-page report predicted the government’s exit of the auto industry would be speedier than some suggested.
The auto estimate was revised downward — largely because of an improved forecast for the government’s $17.2 billion bailout of Ally Financial Inc., previously known as GMAC.
Ally reported a $565 million net profit in the second quarter and expects to be solidly profitable the rest of the year.
“We believe Ally is on the right trajectory and we are confident in our ability to repay the U.S. Treasury's investment,” Ally spokeswoman Gina Proia said.
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