ASSOCIATED PRESS
By Tom Krisher
12/09/2013
DETROIT (AP) —
Without the bailout, the country would have lost more than a million jobs, and the economy could have slipped from recession into a depression, Treasury Secretary Jacob Lew said on a conference call with reporters.
Now, the American auto industry is back, President Barack Obama said in a statement. "Some of the most high-tech, fuel-efficient cars in the world are once again designed, engineered, and built right here in America — and the rest of the world is buying more of them than ever before," he said.
Last month, the government said it expected to sell its remaining 2 percent stake by the end of the year.
Earlier Monday, Mark Reuss, GM's North American president, told reporters in Warren, Mich., that a government exit would boost sales, especially among pickup truck buyers. GM has said repeatedly that some potential customers have stayed away from its brands because they object to the government intervening in a private company's finances. Because of the bailout, GM had been tagged with the derisive nickname "Government Motors.
During the conference call, treasury officials shrugged off a question about whether GM should have been required to pay more because it has a large cash stockpile, saying that the bulk of the bailout money was converted to GM stock. Not doing the bailout would have cost the government more than it lost in missed tax revenue and payments for unemployment benefits and pensions, the officials said.
The company now is sitting on $26.8 billion in cash and is considering restoration of a dividend.
It also has invested $8.8 billion in U.S. facilities and has added about 3,000 workers, bringing U.S. employment to 80,000.
GM shares rose 44 cents, or 1.1 percent, to $41.34 in after-hours trading following the announcement. They rose 1.8 percent in regular trading, at one point reaching $41.17, the highest level since GM's 2010 initial public offering.
The auto bailout was part of the Troubled Asset Relief Program, with the bulk of the money going to financial institutions. Treasury said it spent $421.8 billion on bailouts and so far has recovered $432.7 billion, including the loss on GM.
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The Center for Automotive Research, an Ann Arbor, Mich., think tank, issued an updated report on Monday saying that if the government hadn't intervened and GM went out of business, nearly 1.9 million jobs would have been lost in 2009 and 2010. Federal and state governments also would have lost $39.4 billion in tax revenue and payments made for unemployment benefits and food stamps, the study said.
But critics say the bailout put the government in a position to choose winners and losers when it should have stayed out of private business.
"The American people are tired of Washington politicians taking their hard-earned money, using it to make risky bets and pick winners and losers, and coming up short," U.S. Rep. Jeb Hensarling, R-Texas, said in a statement.