Treasury ups auto bailout loss estimate…

(Detroit News) – The U.S. Treasury Department boosted its estimate of government losses in the $85 billion auto bailout by $170 million.

In the government’s latest report to Congress this month, the Treasury upped its estimate to $23.77 billion, up from $23.6 billion.

Last fall, the government dramatically boosted its forecast of losses on the rescues of General Motors Co., Chrysler Group LLC and their finance units from $14 billion to $23.6 billion.

Much of the increase in losses is due to the sharp decline of GM’s stock price over the last six months.

GM was trading at noon today at $24.24. It’s down 35 percent over its 52-week-high of $37.23, but the Detroit automaker has rebounded from a low set last year of $19.05.

The Treasury, which initially held a 61 percent majority stake in GM, now holds a 26.5 percent share, or 500 million shares in GM. To break even, the government would need to average $53 per share for its remaining stake.

At current prices, the government would lose more than $14 billion on its GM bailout.

The sharp decline in GM’s stock price has put the government’s sale of its remaining shares on hold.

The government booked a $1.3 billion loss on its $12.5 billion bailout of Chrysler.

As part of its $17.2 billion bailout, the Treasury still holds a 74 percent majority stake in Ally Financial Inc., the Detroit-based auto lender and bank holding company. Ally, formerly known as GMAC, put its IPO on hold indefinitely last year because of market weakness.

Source: http://www.detroitnews.com/article/20120130/AUTO01/201300393/Treasury-ups-auto-bailout-loss-estimate?odyssey=mod|newswell|text|FRONTPAGE|s

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