This article originally appeared on watchdog.org.
In late December 2014, the U.S. Treasury Department announced the official end of the automobile industry bailout, after loans given to the â€śBig Threeâ€ť automakers have been repaid to the governmentâ€™s satisfaction.
Final accounting tallies, however, published in 2014 reveal that the corporations received almost $10 billion more than they repaid.
Created in January 2009 as part of the larger Troubled Asset Relief Program (TARP), the Auto Industry Financing Program (AIFP) loaned $79.69 billion to American car manufacturing companies General Motors and Chrysler Motors and their respective in-house financing companies.
Funds allocated from the bailout program,Â part of the national governmentâ€™s response to the subprime lending crisis, were also used to purchase majority shares of the companies, effectively nationalizing the private companies.
After the nationalization, the government later sold Chrysler Motors to foreign manufacturer Fiat. General Motors separated from the General Motors Acceptance Corporation (GMAC) financing companyâ€”now called Ally Financialâ€”to allow GMAC to receive bailout funds as a financial corporation.
Eighteen days before leaving office, the administration of President George W. Bush, a Republican, loaned Chrysler Motors $4 billion in taxpayer funds, through AIFP. On April 30, 2009, President Barack Obama, a Democrat, gave an additional $8.5 billion in taxpayer-backed loans and investments to support Chryslerâ€™s restructuring.
Â General Motors successfully repaid its loans to the Treasury Department in April 2010, resulting in the removal of government control of the company. Chrysler Motors officially repaid its public loans in May 2011, assisted by the 2009 bankruptcy reorganization.
In 2011, the federal government sold its remaining share of Chrysler, based in Auburn Hills, MI, to Italian automobile manufacturer Fiat, for $560 million. Before the sale, Chrysler had received $12.5 billionâ€”an average of about $91.52 from every taxpayer in the United States.
After the Fiat sale, however, the government had recovered only $10.6 billion, writing off the remaining $1.9 billion in outstanding loans as unrecoverable. Adding proceeds from the sale, nearly $1.3 billion in taxpayer money loaned to Chrysler was left unrecovered.
Another AIFP beneficiary, Ally Financial, made its final repayment on December 19, 2014, resulting in Allyâ€™s return to private ownership.
Providing a total of $17.2 billion in public loans, the Treasury Department once owned nearly three-fourths of the bank holdings company. 54.9 million shares of Ally Financial stock were sold to private investors, and control of business operations was returned to the company.
As the bailout concludes, the Treasury Departmentâ€™s accounting of auto bailout loans shows taxpayers only recovered $70.42 billion of the $79.69 billion loaned through AIFP, a loss of $9.6 billion, or about $65.75 per taxpayer.
â€śThe sale of the government’s stake in Ally Financialâ€”GM’s financing armâ€”marks the end of a piece of the Troubled Asset Relief Program, which was originally billed as a bank bailout program,â€ť said Mercatus Center at George Mason University senior research fellow Hester Peirce. â€śTaxpayer money was put at great risk, and the return on investment that Treasury now trumpets is not adequate to compensate taxpayers for the risk they took.â€ť
Speaking of the claimed necessity to save the American automobile industry with taxpayer money, Peirce explained â€śgovernment should not be in the business of selecting winners and losers in the marketplace by directing cheap financing to favored sectors of the economy.â€ť
â€śTaxpayer dollars were invested in a sector of the economy that private money was avoiding for good reason,â€ť she concluded.
Jesse Hathaway (email@example.com) is managing editor ofÂ Budget & Tax News.
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