Move over lil' kids, for America's too-big-to-fail corporations have just bought all the tickets to Disneyland. Santa Claus has rewarded them for their "excellent" behavior by giving them the gift that keeps on giving - the taxpayer funded candy shop and Bernanke's magical printing press. The Detriot News is reporting that:
The Obama administration will tell Congress Wednesday that it expects to lose about $30 billion of the $82 billion government bailout of the auto industry. Gene Sperling, senior counsel to Treasury Secretary Timothy Geithner, confirmed in an interview late today that the administration's forecast is that it will lose $30 billion on its auto investments -- but that's down from an earlier estimate of $44 billion.
"The real news is the projected loss came down to $30 billion from $44 billion," Sperling said, noting that auto sales have improved ahead of what many analysts had forecast. The administration still holds out hope that if things improve, the administration could still recover more.
The Treasury Department has loaned $50 billion to General Motors, and swapped all but $6.7 billion of it for a 61 percent majority stake in the automaker. In order for taxpayers to be repaid fully, GM's stock would have to be worth far more than current estimates when the company goes public as early as next year.
GM chairman and CEO Edward Whitacre Jr. said that GM will make a $1 billion payment of its outstanding loans on Dec. 31 and plans similar quarterly payments. In a Web chat with reporters today, he said the company could opt to make a lump-sum payment.
The administration forgave much of Chrysler's $12 billion in government loans. Fiat SpA, which owns 20 percent of Chrysler and controls the company, must repay $6 billion of the loans before it can acquire a majority stake in the automaker. It can get 15 percent by meeting three benchmarks.
The Treasury Department has also injected $13.5 billion into auto finance company GMAC and now owns a 35.4 percent stake. It is not clear if the government predicts it will lose any of that stake.
"It was right decision then and the right decision now," Sperling said, calling it a "courageous decision by the president" to give the two automakers a "rebirth even though he knew it was not going to be politically popular."
The lesson for all lil' kids out there - make sure to mess things up real big, then Disneyland is all yours to keep.
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