How Deep Is The GM Hole?

Currently it is 42 billion dollars deep:

Despite President Barack Obama’s stories about a resurgent GM ready to repay its bailout tab, the automaker and its former bank still owe taxpayers nearly $42 billion, according to an inspector general’s report.

GM owes $27 billion on the nearly $50 billion it received from the auto bailout and Ally Bank, the company’s lending arm, owes $14.7 billion of the $17.2 billion taxpayer-funded bailout it received.

Obama has promoted the auto bailout as a success story, highlighting the manufacturing jobs it may have saved in swing states such as Ohio and Michigan.

“I refused to turn my back on a great industry and American workers. I bet on American workers. I bet on American manufacturing,” he said at a campaign rally in Oakland. “Three years later, the American auto industry has come roaring back.”

GM’s stock has plummeted in recent months after stagnant development in overseas markets. It hit a new low on Wednesday, falling to $18.80, a 52 percent drop from its January 2011 high of $38.90.

The rapid decline of the stock price has kept taxpayers on the hook for billions in unpaid bailout dollars. The stock would need to make a quick—and meteoric—turnaround for taxpayers to break even.

Remember: if you have a business with unsustainable taxpayer liability, you didn’t do that. Obama did.

18 thoughts on “How Deep Is The GM Hole?

  1. I think I hear the chain on the “Solyndra” bowl being rattled for GM… 😦

    Say, Utah, if they “got the hell out of your way” and let you take over, how long before you could turn GM into the World’s leading auto manufacturer?

  2. Obama and his sycophants do not care. They just want to spend your money, and cripple this nation. All there is to it.

  3. I did not find any specifics on this. That number appears to be more than they received in “bailout” funds. I found a reference to a special tax break for GM but that’s not a bailout. I’m opposed to most of those to multinational corporations but that’s not a bailout. If they were then Republicans are “bailing” out oil companies by the same logic. Something that breaks this down with specifics would be much appreciated.

    • CCF, I think I like your argument here. Not about the specifics, but about the concept. The Democrats have long used the bail out argument concerning oil tax breaks and subsides. Hell, they spent the whole 8 years of the Bush administration doing just that.

      By that logic, then the Republicans also have the right to call the GM “bailout” a bailout. My goodness, even Bloomberg calls it a bailout: http://www.bloomberg.com/news/2012-03-06/the-original-gm-bailout-echoes.html

      Now this administration wants to practice Keynesian Economics & Math, I am just saying it goes both way. Same standard for everyone, and I hope you see that.

    • Found some specifics for you.

      “As of June 30, 2012, taxpayers were still owed $36 billion related to AIG’s
      bailout.” (pg 50)

      “Treasury obligated approximately $84.8 billion through these three programs
      to Old GM and GM, Ally Financial, the Chrysler entities (Chrysler Holding LLC
      [now called CGI Holding LLC], Chrysler LLC [collectively, with CGI Holding
      LLC, “Old Chrysler”], Chrysler Group LLC [“New Chrysler”]), and Chrysler
      Financial Services Americas LLC (“Chrysler Financial”).512 Treasury originally obligated
      $5 billion under ASSP but adjusted this amount to $413.1 million to reflect
      actual borrowings, thereby reducing at that time the total obligation for all automotive
      industry support programs to approximately $81.8 billion. Treasury spent $79.7
      billion in TARP funds on the auto bailout because $2.1 billion in loan commitments
      to New Chrysler were never drawn down.513 As of June 30, 2012, Treasury
      had received approximately $35.2 billion in principal repayments, proceeds from
      preferred stock redemptions, and stock sale proceeds in addition to $4.8 billion in
      dividends and interest.514” (pg 146)

      Office of the Special Inspector General
      SIGTARP for the Troubled Asset Relief Program
      Quarterly Report to Congress
      July 25, 2012

      Source: http://www.sigtarp.gov/Quarterly%20Reports/July_25_2012_Report_to_Congress.pdf

  4. That’s exactly what i was looking for. You rock, Augger! I don’t come to the 42 billion dollar number though. I see that GM owes 27 billion to the treasury and it is due to receive a roughly 700 million dollar dividend payment for the 500 million shares it still owns. Based stock price of 19.11 today US owns roughly 9.5 billion in GM stock. That puts the value of our investment at a negative 17 billion give or take. Still not ideal, but also not 42 billion. However GM still owes the 27 billion, so until we sell the stock or GM defaults on the loan, the loss would not be recognized by most accounting methods I’m aware of.

    “…GM
    GM is still in TARP and taxpayers are owed $27 billion for the investment in GM. In return for its investment, as of June 30, 2012, Treasury holds 32% of GM’s common stock….”

    Now if we include the lending arm, GMAC renamed to Ally Financial then I see where the 42 billion comes from, but this new company appears to be profitable as they have already paid several billion back. We also own 74% of the company. While it is hard to determine an actual value for 74% of this privately held company it is quite likely to be less than zero (which it would have to be to count the entire debt as a loss) and Ally Financial is still expected and expecting to pay back the 14.7 billion from what I read. They are also planning an IPO which could result in converting our interest to cash money.

    “…Automotive Financing Companies
    Ally Financial, formerly known as GMAC
    Ally Financial is still in TARP and taxpayers are owed $14.7 billion for the TARP investment in Ally Financial. In return for its investment, as of June 30, 2012, Treasury holds approximately 74% of Ally Financial’s common stock and $5.9 billion worth of mandatorily convertible preferred shares (“MCP”).

    Proposed Ally Financial IPO
    On March 31, 2011, Ally Financial filed a Form S-1 Registration statement for
    an IPO with the Securities and Exchange Commission (“SEC”).556 The document
    includes a prospectus relating to the issuance of Ally Financial common stock.557
    The prospectus also outlines certain aspects of Ally Financial’s business operations
    and risks facing the company….”

    It would be correct to say we have not recouped our entire investment and that we cannot recoup our investment at full value today. It is not correct to claim it is lost and unrecoverable or even that it is in significant jeaopardy at this point.

  5. Hmm. . . just reviewed the commercial. It is misleading. I never thought they’d repaid them all but the commercial says “…they repaid their loans” (which could be construed as marginally true since they paid a portion of them) but most people would infer from the Tom Hanks narrator that they repaid the entire amount.

    So does Romney still want to take credit for the bailout? 🙂

    http://www.forbes.com/sites/michelinemaynard/2012/05/08/mitt-romney-takes-credit-for-the-auto-bailout-say-what/

    And does Forbes count as a credible source?

    • Oh it’s Obama’s cross to bear, that’s for sure. If I were him, I wouldn’t be campaigning on it either as Chrysler took their money and immediately built a plant in Mexico (that’s outsourcing for those following along).

      But then again, I am not a liberal, and do not have that liberal mentality …. so it is probably good that I am not Obama’s campaign team. 🙂

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