Fact Check on the Auto Bailouts
Last week President Obama visited a Chrysler plant in Toledo, Ohio and made the following statement, “Chrysler has paid back every dollar and more of the investment we made during my watch.” Oh really?
Now I do not mean to make this a political blog, but I must point out misleading statements by our elected officials when the truth can be easily proven.
My father always said, “Figures don’t lie, but liars do figure” and clearly President Obama is doing some fancy figuring!
Here is the basic math.
Chrysler received $14 billion in four separate loans:
- January 2009: Chrysler receives $4 billion loan from TARP.
- January 2009: Chrysler Financial receives $1.5 billion from the Treasury Department.
- May 2009: Chrysler receives a $1.9 billion debtor in possession loan from the Treasury Department.
- June 2009: Chrysler receives a $6.6 billion loan from the Treasury Department.
Total loaned to Chrysler: $14 billion.
Chrysler made the following payments to the federal government:
- May 2010: Chrysler pays the Treasury Department $1.9 billion to settle their January 2009 loan.
- May 2011: Chrysler pays the Treasury Department $5.1 billion as partial settlement for June 2009 loan.
- June 2011: Chrysler pays the Treasury Department $560 million to settle the rest of the June 2009 loan.
Total paid back by Chrysler: $7.56 billion.
The $4 billion bridge loan will never be repaid (this was buried in the actual bankruptcy filing). Only the money loaned Chrysler after the bankruptcy has been repaid.
We the taxpayers did get some shares of the new company two years ago and President Obama is touting their recent sale. The U.S. Government is selling our shares of Chrysler to Fiat for $3.5 billion ($560 million for our shares plus this call option requires repayment of a $3.5 billion loan).
Coincidentally, at the same time we are "cashing out" our shares for $3.5 billion to Fiat, we are giving Chrysler a $3.5 billion fuel-efficient vehicle loan (I guess traditional financing with a bank was not available). No word on when this money will be repaid!
I suspect the President is “figuring” the original $4 billion was during the Bush administration’s watch and I assume he is also counting the $3.5 billion sale of our shares to Fiat - for which we are loaning them money so they can pay back original loan (that's a bit sleight of hand). Using this fuzzy math the $7.56 billion shortfall disappears. But for some reason this does not seem truthful.
by Scott Heintzelman - Scott is a CPA, CMA and CFE living in Pennsylvania. Scott is a partner serving on the executive team at McKonly & Asbury LLP, a regional accounting firm with multiple offices in the Mid-Atlantic. The firm has been an IPA ALL-STAR as well as winning Best Places to Work in Pennsylvania for numerous years.