US bailout will cost taxpayers US$27b
Source: Agencies |
January 31, 2013, Thursday
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A US government watchdog said American taxpayers stand to lose US$27 billion from the 2008 financial bailout, up from a US$22 billion estimate made in the fall.
A report issued yesterday by the special inspector general for the Troubled Asset Relief Program said the estimate is higher because of increased losses for the Treasury Department on sales of shares in bailed-out companies.
Ally Financial, the former financial arm for General Motors, still owes US$14.6 billion of the US$17.2 billion in aid it received. The report said taxpayers can expect to lose US$5.5 billion on that investment because of the company's losses on risky mortgages issued ahead of the financial crisis.
The report also criticized the Treasury for lacking a plan to unwind its investment in Ally. Taxpayers own 74 percent of the company.
Ally and GM together owe more than half of the US$67.3 billion still owed US taxpayers by companies that were bailed out during the financial crisis, according to the quarterly report to Congress by Special Inspector General Christy Romero.
The total owed is down from US$84.2 billion as of September 30, as banks and other financial companies have repaid their investments and Treasury has received proceeds from stock sales. Insurer American International Group Inc, which received the biggest bailout of the crisis, US$182 billion, finished repaying it last year.
After the 2008 crisis, Congress authorized US$700 billion for the bailout of financial companies and automakers under the TARP. About US$413 billion was lent.
GM owes US$21.6 billion of the US$49.5 billion bailout it received.
To recover all of its investment in GM, Treasury would need to sell the automaker's shares it still holds at an average "break-even" price of US$71.86 each - more than double their current price of around US$28. Treasury has held the stock for more than two years, awaiting a better price.
Treasury disputed the report's finding. The department does have an exit strategy for the Ally investment, Assistant Secretary for Financial Stability Timothy Massad said in a letter to Romero.
A report issued yesterday by the special inspector general for the Troubled Asset Relief Program said the estimate is higher because of increased losses for the Treasury Department on sales of shares in bailed-out companies.
Ally Financial, the former financial arm for General Motors, still owes US$14.6 billion of the US$17.2 billion in aid it received. The report said taxpayers can expect to lose US$5.5 billion on that investment because of the company's losses on risky mortgages issued ahead of the financial crisis.
The report also criticized the Treasury for lacking a plan to unwind its investment in Ally. Taxpayers own 74 percent of the company.
Ally and GM together owe more than half of the US$67.3 billion still owed US taxpayers by companies that were bailed out during the financial crisis, according to the quarterly report to Congress by Special Inspector General Christy Romero.
The total owed is down from US$84.2 billion as of September 30, as banks and other financial companies have repaid their investments and Treasury has received proceeds from stock sales. Insurer American International Group Inc, which received the biggest bailout of the crisis, US$182 billion, finished repaying it last year.
After the 2008 crisis, Congress authorized US$700 billion for the bailout of financial companies and automakers under the TARP. About US$413 billion was lent.
GM owes US$21.6 billion of the US$49.5 billion bailout it received.
To recover all of its investment in GM, Treasury would need to sell the automaker's shares it still holds at an average "break-even" price of US$71.86 each - more than double their current price of around US$28. Treasury has held the stock for more than two years, awaiting a better price.
Treasury disputed the report's finding. The department does have an exit strategy for the Ally investment, Assistant Secretary for Financial Stability Timothy Massad said in a letter to Romero.
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