![]()
- Abu Dhabi Will Aid Debt-Fraught Dubai 'Case by Case'
- Banks With The Biggest Exposure to The UAE
- Dubai's Debt Woes Signal New Era for Creditors
- Next Week: Cash In Now Or Wait For A Santa Rally?
- Dubai Stock Selloff May Bring Buying Opportunity
- Longer Lines, Fuller Carts This Black Friday
- Big US Banks May Be Forced to Raise Capital: Bove
- Bank of America Amends Pay for Senior Executives
- Tiger Woods Out of Hospital After Accident
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Surprising Options Trades in TiVo Shares
- EA Sports Hopes to Pump Up Sales Through Pop-Up Locations
Writer/Producer
Taxpayers may not recover all of the bailout money awarded to the auto sector, said Elizabeth Warren, chair of the Congressional Oversight Panel in charge of the Troubled Assets Relief Program [TARP].
“When Treasury wants to get tough, it knows how to do so,” she said. “And it did it in the case of the auto industry. Whether that ultimately will be enough to get all of the money for the American taxpayers, I don’t know.”
The Treasury Department spent $49.9 billion in TARP funds for General Motors, which emerged from bankruptcy in mid-July, and $14.3 billion for privately held Chrysler, parts of which remain in bankruptcy proceedings.
While taxpayers’ total net investment is about $81 billion today, the government’s equity stake in Chrysler would need to reach $5.7 billion to recover all funds, assuming other loans are paid, said the Congressional Oversight Panel.
(See the accompanying video for the complete interview.)
Long before Treasury stepped in and TARP funds were awarded, the auto sector was in trouble, Warren told CNBC. Although taxpayers are likely to suffer losses from early funding given by the Bush administration, she said, bailout money given during the Obama administration will likely be recovered.
“The administration decided we’re going to put more money in,” she said. “They were tough negotiators. They really cracked heads. They forced some real concessions, put down a big investment and they’ll get some of that back.”
When awarding TARP dollars, Treasury treated the auto and banking industries differently, said Warren. In the case of the auto sector, Treasury imposed higher terms and conditions.
“You’re going to have to have an entirely new business plan that you can persuade us is good and successful,” she said. “You’re going to have to get rid of some top management. You’re going to have to wipe out your shareholders. You’re going to have to force your creditors to take a cut. You’re going to have to force labor concessions. In other words, you’re going to have to completely reshape this business. Contrast that with what happened in the case of the banks, where we said ‘take the money.’”
Warren also said ambiguous language in the Congressional statute left room for Treasury to decide which entities are systemically important such as AIG
[AIG
Loading...
()
] and Citibank [C
Loading...
()
], she said.
“The real point is Congress had the opportunity to say no. You can’t do that. Here are the restrictions on how we want the money spent,” she said. “Congress didn’t go there. Congress seems content to let Treasury spend the money in this way.”
More Automotive News on CNBC.com:
- These four sectors will be the next to lead the market.
- Zhu Zhu Pets are this year's must-have toy, fetching $40 or more on eBay.
- From the why-didn’t-I-think-of-that file, we present Jason Sadler, a man whose job is wearing T-shirts.
- It may be the most unusual guide to business you'll read.
- Shopping for a gadget hound? The choices can be baffling. Here are a few that should be a hit.
- "The Who" will be the halftime act for Super Bowl XLIV on Feb. 7 in Miami. Is the NFL behind the times?













