The Treasury Department expects to lose about $25 of the $85 billion used to bailout the auto industry, which is 15 percent higher than previously estimated, The Detroit News reports.
“In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update,” according to the Detroit News article.
“The report may still underestimate the losses. The report covers predicted losses through May 31, when GM’s stock price was $22.20 a share,” it adds.
Indeed, considering that on Monday GM’s stock fell 0.3 percent to $20.47, the losses may be greater than the latest report estimates:
“At that price, the government would lose another $850 million on its GM bailout,” the report adds.
Considering that the feds still hold 500 million shares of GM stock, they’d have to find a way to offload them for about $53 apiece to recover the $49.5 billion spent in bailing out the troubled automaker. But if the stock continues to stay where it is, this means that the feds will end up posting a loss of more than $16 billion on bailing out GM.
Of course, when we talk about the feds posting a loss, whose loss is it really (hint: taxpayers)?
“The steep decline in GM’s stock price has indefinitely delayed the Treasury’s sale of its remaining 26 percent stake in GM. No sale will take place before the November election,” The Detroit News adds.
But hey! Don’t worry, Treasury spokesman Matt Anderson reminds us that the costs are actually way lower than previously estimated.
“The auto industry rescue helped save more than one million jobs throughout our nation’s industrial heartland and is expected to cost far less than many had feared during the height of the crisis,” Anderson said.
Some of you may remember that the Obama administration had originally predicted a loss of $40 billion on the bailout but later changed that figure to $30 billion in 2009.
Still, the feds’ most recent estimates aren’t as “rosy” as last year’s.
“The Treasury Department said in a May 2011 report that its estimate of auto bailout losses was $13.9 billion. The Congressional Budget Office also estimates a $14 billion loss. The CBO has written off $8 billion of the government’s auto bailout as an unrecoverable loss,” the Detroit report adds.
Meanwhile, GM CEO Dan Akerson assured employees last Thursday that the company would find a way to raise its price.
Final Thought: If this is how these sorts of things will turn out (i.e. billion dollar losses), than we really, really hope President Obama was fooling around when he suggested last week that we “rescue” “every industry”:
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Front page photo source: The Associated Press