The US Treasury announced that the estimated losses for the $85 billion auto bailout dropped 16% or $4 billion mainly because GM’s stock price began to rebound.

The Obama administration recently announced that the estimated auto losses fell to $20.3 billion fro the previous forecast of $24.3 billion. In 2009, the US Treasury expected to lose $44 billion on its bailout of GM, Chrysler and their financing arms, but that forecast dropped to $30 billion at the end of 2009 and to $14.3 billion in 2011.

Two months ago the Treasury sold 200 million shares from the total of 500 million shares in GM for $5.5 billion, therefore reducing its holdings in the US automaker to 19%. As the sale was below the break-even price, the Treasury now needs to sell the rest of the stake with the average price of $70 a share to break even.

The Treasury allocated $484 billion for the Troubled Asset Relief Program and it expects total losses of $55.5 billion, a decrease from $59.7 billion its most recent estimate. Yesterday, GM stock closed at $28.53 a share, down 4 cents. The Treasury managed to exit Chrysler after its $12.5 billion bailout, existing Ally Financial has been delayed with 18 months and the exit from GM is expected to be finalized by March 2014.


Please enter your comment!
Please enter your name here