U.S. Treasury Increases Losses On Chrysler, GM Bailouts

William Maley

Editor/Reporter - CheersandGears.com

January 30, 2012

The U.S. Treasury Department revealed in a new report to Congress that it will lose more money than expected on the 2009 bailout loans given to Chrysler and General Motors. The Treasury now expects to lose $23.77 billion on the $85 billion bailouts, up from the $23.6 billion losses estimated last fall.

Most of the increase in the projected loss is due to GM's stock price declining over the past six months. GM's stock price at the end of trading stands at $24.37; a drop of 35% from the 52-week-high of $37.23.

The Treasury currently owns 26.5%, or 500 million shares in GM. At the current price, the Treasury stands to lose more than $14 billion. To break even, shares of GM would need to go up to an average of $53 per share.

As for Chrysler, the Treasury noted a $1.3 billion loss on the $12.5 billion bailout. The loss is due to "Old Chrysler" being dissolved.

Source: The Detroit News