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US Treasury Losses $11.2 Bln On 2008 TARP Bailout Of General Motors

The U.S. Treasury has realized a loss of $11.2 billion on its bailout of automaker General Motors Co. (GM) during the height of the financial crisis in 2008, according to a quarterly report submitted to the Congress dated April 30, 2014 from the office of the Special Inspector General for the Troubled Asset Relief Program or TARP.

The loss on the bailout also includes $826 million that the Treasury wrote off on March 30, 2014 as administrative claim in the company's 2009 bankruptcy, ending all taxpayer involvement with General Motors.

The bailout enabled the largest U.S. automaker General Motors to avoid liquidation and to restructure under a bankruptcy filing in 2009.

In return for a total of $49.5 billion in bailout loans to General Motors, the Treasury received $6.7 billion in debt in General Motors, $2.1 billion in preferred stock and a 61 percent common equity stake. The Treasury sold its last shares in General Motors on December 9, 2013.

The report states that taxpayers have lost $11.2 billion on the principal TARP investment in General Motors as of March 31, 2014.

Under the Treasury's Automotive Industry Support Programs or AIFP, the taxpayers had lost a total of $14.9 billion, including $845 million on the sale of Ally Financial's common stock, as well as $2.9 billion on the principal TARP investment in Chrysler Holding LLC.. Meanwhile, Chrysler Financial Services Americas LLC fully repaid its TARP investment.

As of March 31, 2014, a total amount of $79.7 billion had been disbursed through the AIFP and its subprograms, and Treasury had received $59.1 billion in principal repayments, preferred stock redemption proceeds, and stock sale proceeds.

The report revealed that the Treasury had received about $38.9 billion related to its General Motors investment, $10.7 billion related to its Ally Financial/GMAC investment, $8 billion related to its Chrysler investment, and $1.5 billion related to its Chrysler Financial investment as of March 31, 2014.

As of March 31, 2014, Ally Financial, formerly GMAC Inc., remains the only auto-related company whose stock is currently owned by Treasury. The taxpayers were owed $6.5 billion, however, following the IPO on April 10, 2014, taxpayers are now owed $4.1 billion for TARP's investment in Ally Financial.

GM closed Wednesday's regular trading session at $34.48, up $0.49 or 1.44% on a volume of 14.04 million shares.

by RTT Staff Writer

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