Analysis says federal bailout of GM and Chrysler is a success

Article by Anita Panait, on December 11, 2013

The United States government will likely recover nearly $14 billion less from the bailout money it used to rescue General Motors and Chrysler. That may seem to be a big loss, but the way the Center for Automotive Research sees it, the government intervention could be regarded as a success. According to the Center for Automotive Research, every dollar spent on taxpayers’ behalf resulted to nearly eight dollars in savings.

This is primarily due to the fact that the rescue funds provided in 2008 and 2009 prevented GM and Chrysler from collapsing into in bankruptcy – an event that would have wiped out $284 billion in household income in 2009 and 2010 and sap $105 billion from federal coffers by chiseling tax revenues and increasing demand for services like unemployment insurance.

The Center for Automotive Research “is confident that in the years ahead this peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history,” wrote Sean McAlinden and Debra Menk, the senior researchers who wrote the report. The analysis comes as the US Treasury gets ready to sell its remaining GM shares by the end of 2013, allowing GM to entirely drop the moniker “Government Motors.”

The share sale also will pave way for new opportunities for GM, which was forced to restrict its executive pay and shareholder rewards since the US government bailed it out.  “This sale will almost certainly restart the discussion over the question of the ‘worthiness’ of the government’s ‘investment’ in the new GM or its actual return to the general public,” McAlinden and Menk wrote.

If you liked the article, share on:

Topics: gm, chrysler

Comments

Recommended

It has been nearly eight years since Toyota entered a new era of sports cars when it officially unveiled the production version of the Toyota 86 – also known as...
by - February 27, 2019
The new Audi TT RS – yes, the top version of the German carmaker’s facelifted TT model series – is now officially here. If you could remember, the range-topping TT...
by - February 18, 2019
Nearly half a year ago when McLaren Automotive unveiled the McLaren 600LT Coupe, the British carmaker is now introducing a version that lets its passengers enjoy the thrill of an...
by - January 25, 2019
German carmaker Volkswagen is now making the latest evolution of the new Volkswagen Golf GTI -- the new Golf GTI TCR. First unveiled as a concept at the annual GTI...
by - January 24, 2019
It has been three and a half years since BMW unveiled the sixth generation of the BMW 7 Series. Thus, it is really about to give the 7 Series a...
by - January 17, 2019