President errs on auto bailout claim
Austin, December 30, 2014 — President Obama made this strangely coincidental statement in his prepared remarks at the President’s year-end press conference:
And effectively today, our rescue of the auto industry is officially over. We’ve now repaid taxpayers every dime and more of what my administration committed
– President Barack Obama, 12/19/2014
Sorry, Mr. President. Not true. You are off by about $10 billion. Just ask the U.S. Treasury Department.
Auto industry rescue
At the press conference, the President was talking about his personally engineered $79.69 billion TARP bailout of General Motors and Chrysler to save them from bankruptcy. That was nearly six years ago. It was the last big spending piece of the massive TARP program.
The President’s automotive rescue is formally audited under TARP as the “Automotive Industry Finance Program (AIFP)”. It started just days after Barack Obama assumed the presidency.
Ultimately, both General Motors and Chrysler declared bankruptcy anyway. Obama’s “car czar” team negotiated the sale of Chrysler to its UAW employees. The employees then promptly sold it to Italian automaker Fiat. Chrysler is no longer an American owned company. It’s formally known as Fiat Chrysler Automobiles (FCA US LLC).
TARP is better known as the “bailout of the big banks”. It was the springboard for two massive protest movements. The first is the Tea Party Movement. The second was the Occupy Wall Street Movement two years later.
TARP stands for Troubled Asset Relief Program. It was authorized by the Emergency Economic Stabilization Act of 2008.
It was signed into law on October 3, 2008 by President George W. Bush, on a Friday afternoon. The bill had been hastily put together less than 48 hours earlier. The emergency was the well-founded belief that if the federal government failed to act by Monday then global credit markets would totally freeze-up, resulting in a world-wide depression. It was the darkest day of the economic crisis. Depression was averted, but recovery has been years in the making.
TARP’s original purpose was to purchase toxic sub-prime mortgage assets and equity from failing financial institutions to save the financial sector. The auto bailouts were a loan program add-on.
The federal government ultimately dispensed $426.35 billion of the $700 billion originally authorized by Congress. TARP is managed by the U.S. Treasury Department through the Federal Reserve Bank.
Daily TARP Update Report
The U.S. Treasury Department has published a one-page daily TARP summary report every business day since 2/9/2011.
According to the Daily TARP Update for 12/24/2014, the automotive loan program has recovered $69.15 billion of the $79.69 billion loaned to automakers.
If it’s true, as stated by the President at his year-end press conference, that the auto rescue program was officially closed on that very day, then taxpayers were stiffed for a $10.54 billion loss on their $79.69 billion outlay. That’s a 13 percent loss on investment.
On the other hand, taxpayers made a profit off the “bailout of the big banks”. They are listed under the subheading “Banks with Assets $10 billion or Greater” in the Daily TARP Update.
According to TARP, $165.33 billion was loaned to the big banks and they repaid $179.49 billion. Taxpayers made $14.16 billion in profits, an 8.5 percent return on investment. Those loans were paid off years ago.
If you include AIG as a “big bank” bailout then taxpayers made another $5 billion more in profits when repayments and stock profits are accounted for, as shown in the daily TARP update.
The President’s year-end press conference will best be remembered for taking questions from female journalists only, selected from his “naughty and nice list”.
That’s too bad. Presidential prepared remarks should be better vetted.