WASHINGTON, D.C.: The US Treasury last week sold its last shares in General Motors, ending the dramatic rescue of the auto giant at the height of the financial crisis five years ago.
The Treasury took a loss of more than $10 billion on the $49.5-billion bailout, but said that saving the US auto industry, the jobs of millions of auto workers and the pensions of many retirees, was worth it.
The 2008 rescue, highly controversial at the time, “helped stabilize the auto industry, and prevent another Great Depression,” Treasury Secretary Jacob Lew said. He added that President Barack Obama “understood that inaction could have cost the broader economy more than one million jobs, billions in lost personal savings, and significantly reduced economic production.”
“Less than five years later,” Obama cheered in a separate statement, “each of the Big Three carmakers is now strong enough to stand on its own. They’re profitable for the first time in nearly a decade. The industry has added more than 372,000 new jobs—its strongest growth since the 1990s.”
In late 2008 the administration of then-president George W. Bush began the rescue of the industry, which was then expanded into a comprehensive program by his successor Obama. It was attached to the massive Troubled Asset Relief Program set up to rescue banks, amid worries that the collapse of the automobile industry would plunge the US economy into deeper recession.
The government took financial control of both GM, the largest US carmaker, and Chrysler. Canadian authorities, worried about auto industry job losses on their side of the border, also took part in the rescues.
The number two producer, Ford, opted to stand on its own—though analysts say that Ford benefited from the rescue of the two competitors, bolstering general confidence as well as saving the parts industry that all three share.
Treasury officials said the bailout of GM and Chrysler, which it exited earlier with the sale of most of its shares to Italian carmaker Fiat, would leave it with a net loss of about $15 billion. AFP