The federal government is unlikely to recover all of the $81 billion in bailout assistance it extended to the automobile industry, according to a congressional panel.
The Congressional Oversight Panel said in a new report that the $23 billion in aid extended late last year to Chrysler LLC and General Motors Corp. would probably not be repaid.
Under the federal auto bailout package, General Motors received $50 billion to retool and ease its transition into bankruptcy. Chrysler received $10.5 billion. In addition, the government gave $12.5 billion to auto financing firm GMAC and $3.5 billion to auto suppliers.
The market value of those companies -- and of the government's stock in them - would have to rise dramatically for the government to make back its initial investment. The report noted that, for taxpayers to break even, the restructured an streamlined General Motors would need to have a market capitalization higher than that the original, much larger company ever achieved.
Overall, taxpayers now hold 10 percent of Chrysler and 60 percent of General Motors.
"Although taxpayers may recover some portion of their investment in Chrysler and GM, it is unlikely they will recover the entire amount," the panel said.
A spokesman for General Motors disagreed, telling the Associated Press that the company expects to fully repay the government.
"We are confident that we will repay our nation's support because we are a company with less debt, a stronger balance sheet, a winning product portfolio and the right size to match today's market realities," the automaker said in a statement.
The panel also continued to raise questions about the transparency of government investment decision-making, as it has for the housing-related aspects of the bailout program.
"The Treasury auto team failed to disclose to the public both the factors and criteria it used in its viability assessments, the scope of outside involvement in its evaluations, and its basis and reasoning for selecting particular benchmarks," the report said. "Simply, its disclosures did
not go far enough."
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