The Corner

Taxpayers Will Lose Money on GM Bailout

The federal government will not recoup the entirety of the money spent on rescuing General Motors, according to a report released by the bipartisan Congressional Oversight Panel today.

The panel reported that the Congressional Budget Office now expects that the government will lose $19 billion from the bailout. Part of that loss is due to the Treasury’s decision to sell some of the GM holdings at $33 per share in November — significantly less than $44.59 per share needed to ensure the taxpayers didn’t lose money on the deal.

Noting that the Treasury said that the decision to sell the shares was made “to unwind government ownership of the automobile industry as quickly as possible,” the panel somewhat snarkily replied that “because Treasury has cited different, conflicting goals for its automotive interventions at different times — saying, for example, that it wished to save American jobs, to produce the best possible return to taxpayers, or to return the company to private ownership as rapidly as possible — it is difficult for the Panel or any outside observer to judge whether Treasury’s results in fact qualify as successful.”

The report also warned that the bailout of GM “suggested that any sufficiently large American corporation — even if it is not a bank — may be considered ‘too big to fail,’ creating a risk that moral hazard will infect areas of the economy far beyond the financial system.”

Katrina Trinko — Katrina Trinko is a political reporter for National Review. Trinko is also a member of USA TODAY’S Board of Contributors, and her work has been published in various media outlets ...

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