When President Obama took office, America’s automobile
industry was on the brink of collapse. The financial crisis had nearly frozen
access to credit for vehicle loans and sales had plunged by 40 percent. Faced
with that sober reality, the Obama Administration moved quickly to protect the
broader economy by stabilizing the industry. These actions saved more than one
million American jobs, according to independent estimates.
The automobile industry is now profitable and creating jobs
at the fastest pace in 15 years. In fact, since June 2009, when GM and Chrysler
emerged from bankruptcy, more than 340,000 jobs have been created.
Treasury exited its investment in Chrysler in 2011, recovering 90 percent of the taxpayer funds invested six years ahead of schedule. In December 2013, Treasury exited its investment in GM, recouping a total of $39.7 billion from its original GM investment when it sold all of its remaining shares of GM common stock. In April 2014, Treasury announced that it
agreed to sell 95,000,000 shares (post-split) of Ally common stock at a price
to the public of $25.00 per share (post-split), for $2.375 billion in proceeds
to taxpayers. Subsequently, the IPO underwriters exercised, in part, its
over allotment, and Treasury sold an additional 7,245,670 shares at $25.00 per
share. In total, Treasury sold 102,245,670 shares as part of the
IPO. Treasury holds roughly 16 percent of common stock in the company,
and has recovered approximately $17.8 billion of the $17.2 billion investment
provided to Ally during the financial crisis. Treasury will continue to work
with Ally to further wind down this investment through either a public
offering, private sale of its common shares, or other alternatives.
While there is still more to work to be done, the decision to rescue the
American auto industry helped the economy recover from the financial crisis and
enabled the auto industry to come roaring back.
While the auto industry rescue may end up as a net cost to the government, the cost of a disorderly liquidation to the families and businesses across the country that rely on the auto industry would have been far higher. The government’s actions not only saved GM and Chrysler but they saved many businesses up and down the supply. They even helped Ford, as its CEO has acknowledged.