American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion

U.S. Government Sells Chrysler Stake, Losses Higher Than Reported
Doug Mataconis · Saturday, July 23, 2011

The United States Government has officially sold it’s last stake in Chrysler, but the loss the taxpayers suffered is much higher than the number that’s being officially reported:

DETROIT — The federal government on Thursday shed the last of its stake in Chrysler, giving majority control of the carmaker to Fiat, the Italian company, while leaving taxpayers $1.3 billion short of recovering the full investment they made two years ago to keep Chrysler from going out of business.

The government had said in June that it expected to take that much of loss on its investment. But it has said that if it had not stepped in with a bailout and the company had been forced to shut down, the damage to the fragile economy would have been worse.

At the time Chrysler filed for bankruptcy in 2009, its prospects for survival appeared grim, even with the government’s help.

Still, the net loss on the Chrysler investment became political fodder over the terms of the federal bailout.

Representative Darrell E. Issa, Republican of California, said Thursday that the Obama administration “has sold out an American icon to a foreign company,” and is now “essentially giving that same company $1.3 billion of taxpayer money.”

The Treasury Departmentsaid in a statement that it had recovered $11.2 billion of the $12.5 billion it lent to Chrysler and that it would write off the bulk of the balance. The unpaid portion is on the balance sheet of the “old Chrysler” — a collection of unwanted assets being liquidated in bankruptcy.

That, along with the reported claim that Chrysler had repaid in full its obligations to the U.S. Government back in May simply isn’t true:

American taxpayers have already spent more than $13 billion bailing out Chrysler. The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back. But how is Chrysler now paying off the rest of the $7.6 billion they owe the Treasury Department?

The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.