The federal bailout of AIG during the waning days of the Bush administration was controversial, but ultimately netted the US government $22.7 billion in profit. President Obama obviously had hopes that the similarly controversial bailout of General Motors or GM, would be equally profitable, but according to Reuters, it looks like it won’t be.
The bailout from the US government dates back to 2009, when the Treasury department loaned GM $49.5 billion for “$2.1 billion in preferred stock and a 60.8 percent equity stake.” However, GM has not had the growth needed to make that a positive return on the investment of the US government. In order to end the involvement with the federal government as quickly as possible, Treasury is selling of their shares off at a loss.
According to The Los Angeles Times, “taxpayers have recovered $32.5 billion” of the initial investment and Treasury “still owns 189 million GM shares, worth about $.6.5 billion.” If the price-per-share remains at $34.41 over the next 15 months, the government’s losses would be less than $10 billion.
The Troubled Asset Relief Program has been repaid all but five percent of $420 billion disbursed to stimulate the economy. Still, proponents of the bailout suggest that both the GM and AIG efforts were never about profit, but instead about propping up vital American companies in order to save them from going out of business.