Last Friday, the Office of the Special Inspector General of the Troubled Asset Relief Program — folks call it the SIGTARP for short — released a quarterly report on the all-important, save-the-financial-world government program. As part of the 224-page report, the SIGTARP assessed whether General Motors and Chrysler LLC will pay back the $64.4 billion of TARP funds the companies have received. The verdict: not likely.
[I]n order for Treasury, and thus the U.S. taxpayers, to recoup their investment in GM, New GM would need to achieve an estimated market capitalization of $66.9 billion when Treasury sells its shares; GM had a market capitalization of $57 billion at its peak in 2000. Similarly, Chrysler would need an estimated market capitalization of $54.8 billion for Treasury to earn enough on the sale of its equity to break even. Chrysler’s last publicly disclosed valuation was an estimated $37 billion when it merged with Daimler in 1998. Treasury notes “that the companies’ past equity values are not comparable to today’s equity values because the companies have substantially restructured their balance sheets through bankruptcy.” According to the TARP Financial Statements, Treasury projected that, as of September 30, 2009, the AIFP investments will result in a $30.5 billion loss to U.S. taxpayers.
The SIGTARP did not handicap GMAC’s repayment of the $17.2 billion of TARP funds it has received. SIGTARP did, however, note that “GMAC remains a TARP exceptional assistance recipient and, as such, continues under the supervision of the Special Master for TARP Executive Compensation.”
If legislation becomes too restrictive it will cause more independent car dealers to use one of our favorite pre-repo phrases which is, “How far is it to your nearest bus stop?”
Sometimes, I really wonder if legislators really think propositions through completely, including consequences to the buying public. Another thought is that the legislators are really trying to establish the government as the source of everything and that people don’t need to work to provide anything for themselves.