Saving GM, Chrysler and jobs to cost U.S. $17 billion
The Treasury Department on Tuesday said that saving General Motors, Chrysler and auto finance companies is going to cost the U.S. treasury about $17 billion, less than half of what it originally projected. The White House noted that the effort also saved millions of auto industry and related jobs. The final tally of government losses wont be known for years, however, until the government sells its entire stakes in General Motors Co., Chrysler Group LLC and Ally Financial Inc.
The federal government invested nearly $86 billion into the auto industry over the past three years, including a $5 billion fund to guarantee payments to auto suppliers that has since been repaid in full. That investment consisted of $50 billion to GM for which it took a 61 percent stake in the company and a $12 billion loan to Chrysler for a 10 percent stake.
The auto estimate was revised downward largely because of an improved forecast for the governments $17.2 billion bailout of Ally Financial Inc., previously known as GMAC. Ally reported a $565 million net profit in the second quarter and expects to be solidly profitable the rest of the year.
We believe Ally is on the right trajectory and we are confident in our ability to repay the U.S. Treasury's investment, Ally spokeswoman Gina Proia said.
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