WASHINGTON -- The federal government is likely to lose $19 billion, or 24 percent, on its $80 billion bailout of the auto industry, the nonpartisan Congressional Budget Office estimated yesterday.
That’s a substantially lower loss than the CBO’s March estimate of $34 billion -- in part because General Motors’ initial public offering this month is returning $14 billion to the government, the report said.
“The auto companies have repaid or settled much of their outstanding debt with the Treasury and have continued to demonstrate some measure of financial stability,” the CBO said.
The auto industry losses account for most of the $25 billion in predicted losses from the $700 billion U.S. Troubled Asset Relief Program for banks, insurers and the auto industry.
The CBO said the remaining losses are likely to stem from assistance to the American International Group insurance company and grant programs to avoid foreclosures.
Too late for politicos
While the dwindling loss estimate is good news for the Obama administration, it didn’t come soon enough to help a number of lawmakers who were unseated Nov. 2 in part because of their TARP support.
Senator Bob Bennett, a Utah Republican, was voted out of the Republican primary by delegates, many of whom were backed by the Tea Party. They made an issue of Bennett’s vote for TARP.
“I did try saying during the campaign that TARP was going to pay the money back,” Bennett told The Salt Lake Tribune two months ago. “Apparently, nobody believed me.”
Bush bailout funds
In October 2008, TARP was initiated by the Bush administration with congressional support in an attempt to stabilize the financial sector.
The program was expanded by the Obama administration.
White House senior adviser David Axelrod told The Washington Post last month that the declining cost of TARP “shows that you can -- if you’re creative and you’re hard-nosed and you manage well and you demand accountability -- you can make these things work.”