Auto bailout's estimated cost to taxpayers: $19 billion

By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- A Congressional oversight panel says that a "starkly improved" outlook for the auto industry has reduced the likely taxpayer loss on the bailout by more than half to about $19 billion.

The previous estimate from the panel was that taxpayers would lose $40 billion of the $81.3 billion given to the automakers and their finance arms from the Troubled Asset Relief Program.

The bailouts funded the automakers' operations through bankruptcy and Treasury ended up with significant equity in the various companies in return for the bailouts.

The report questions Treasury's decision to sell so much of its stake in General Motors (GM) during the automaker's successful initial public offering in November, saying the decision "essentially locked in a loss of billions of dollars and thus greatly reduced the likelihood that taxpayers will ever be repaid in full."

And it also cast doubt on whether Treasury will be made whole on a smaller bailout of the Chrysler Group, and questioned its handling of its holdings in the former finance arms of the two automakers, GMAC/Ally Financial and Chrysler Financial.

Treasury spokesman Mark Paustenbach said that despite the criticisms in the report, the analysis of the bailout was largely positive. The report acknowledged the government's action was necessary, he said, and because of the bailouts, the industry is now on a promising course.

Administration officials said it is too soon to say the final cost to taxpayers until the last shares of stock in GM, Chrysler and Ally Financial are sold.

But the Congressional report also says that there are significant consequences of the bailout which go beyond the loss of tax dollars.

"Treasury's rescue suggested that any sufficiently large American corporation -- even if it is not a bank -- may be considered 'too big to fail,' creating a risk that moral hazard will infect areas of the economy far beyond the financial system," it said.

"Further, the fact that the government helped absorb the consequences of GM's and Chrysler's failures has put more competently managed automotive companies at a disadvantage. For these reasons, the effects of Treasury's intervention will linger long after taxpayers have sold their last share of stock in the automotive industry." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,805.41 127.51 0.76%
Nasdaq 4,483.72 30.92 0.69%
S&P 500 1,964.58 13.76 0.71%
Treasuries 2.27 -0.00 -0.09%
Data as of 12:26pm ET
Company Price Change % Change
Ford Motor Co 13.78 -0.62 -4.31%
Microsoft Corp 46.13 1.11 2.47%
Apple Inc 105.22 0.39 0.37%
Bank of America Corp... 16.72 0.12 0.72%
Yahoo! Inc 43.50 0.90 2.11%
Data as of Oct 24

Sections

New York headlines took a straight forward and direct approach with NYC's Ebola news. More

The midterm elections are around the corner, and the economy remains a top concern. With unemployment down and inflation low, why do people still feel the economy stinks? More

Shares of Facebook recently topped $80. They've more than quadrupled from their post-IPO lows of two years ago. Can Mark Zuckerberg keep the momentum in mobile going? More

Host a furniture market. Here's how small town High Point, N.C. rakes in this much money -- twice a year. More

If you're looking to fly this holiday season, the clock's ticking to get the best prices. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.