White House: Taxpayers will be repaid for ‘some’ of auto bailout

November 3, 2009 http://detnews.com/article/20091103/AUTO01/911030409

White House: Taxpayers will be repaid for ‘some’ of auto bailout

Detroit News Washington Bureau

Washington — The White House won’t guarantee that General Motors Co. and Chrysler Group LLC would repay the full $62 billion they have received in government bailouts.

Reacting to a Government Accountability Report that said automakers are "unlikely" to repay all of the government loans, White House spokesman Robert Gibbs told reporters today that taxpayers would at least get "some" of the money back.

"I think the American people will see some of that money returned," Gibbs said, declining to suggest how much. "I’m not the car czar."

The Obama administration’s former car czar, Steve Rattner, says taxpayers have lost roughly $25 billion on their investment in GM, and there’s no hope of recovering the first $4 billion loaned to Chrysler.

The GAO report cited the Treasury Department’s internal analyses that said GM and Chrysler’s market capitalizations, when their stock is publicly offered, are "unlikely" to be enough to be repaid.

Other reports, including the Congressional Oversight Panel, also suggest taxpayers stand to lose billions on the $81 billion auto industry bailout, which includes loans to GMAC and an auto supplier support program. The Congressional Budget Office predicted in June that taxpayers will get just 27 percent of their initial investment in the auto industry back.

GM received about $50 billion in government loans. The government swapped about $43 billion of the loans for a 61 percent equity stake in GM, so the only way the government can be repaid in full is if the company is worth far more than it was previously, when it holds an initial public offering as early as late next year.

The government also swapped much of its loans in Chrysler for a nearly 10 percent equity stake.

GM said it is committed to repaying the loans.

GM spokesman Greg Martin said the automaker is working to repay the government.

"If we get our job done, the government has an excellent chance of getting a return on its investment," he said

Gibbs praised the efforts of GM and Chrysler, and noted that Ford Motor Co. had made money in North America in the third quarter. It was Ford’s first quarterly profit since 2005 in that important market.

"We see that GM and Chrysler have begun to make strides in putting themselves on firmer footing," Gibbs said.

He said the bailouts of the two automakers were "not easy decisions" for President Barack Obama.

"The president also believed that we had a chance to remake a more competitive American auto industry that employs tens of thousands of Americans," Gibbs said.

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