April 30, 2014 news reports say that the US treasury now reports losing $11.2 billion on the GM takeover fiasco, and has written off its “investment” in old GM.  (See below for cut and paste.) The government obviously went into the “deal” knowing that the big picture was that jobs and industries would be saved, but the transaction costs would be high, with likely losses. So, why is that a bankruptcy court – as a court of equity – would feel compelled to enforce a deal term for a deal that was known to be a political deal with little or no economic validity? Thus, just another reason why it’s absurd to enforce the bankruptcy plan term and thereby  leave apparent tort victims to suffer extreme individual losses. In contrast, paying some millions to past tort victims would be and is immaterial to the financial debacle that was and is “Old GM.”

 

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(Reuters) – The U.S. government lost $11.2 billion on its bailout of General Motors Co, more than the $10.3 billion the Treasury Department estimated when it sold its remaining GM shares in December, according to a government report released on Wednesday.

The $11.2 billion loss includes a write-off in March of the government’s remaining $826 million investment in “old” GM, the quarterly report by a Treasury watchdog said.

The U.S. government spent about $50 billion to bail out GM. As a result of the company’s 2009 bankruptcy, the government’s investment was converted to a 61 percent equity stake in the Detroit-based automaker, plus preferred shares and a loan.

Treasury whittled down its GM stake through a series of stock sales starting in November 2010, with the remaining shares sold on Dec. 9, 2013.

At the time of the December sale, Treasury put the total loss at $10.3 billion but said it did not expect any significant proceeds from its remaining $826 million investment in “old” GM, the report by the Office of the Special Inspector General for the Troubled Asset Relief Program said.

The U.S. bailout of GM and Chrysler, which received about $12.5 billion, saved 1.5 million jobs in the United States, according to the Center for Automotive Research.

Last week, GM posted its 17th consecutive profitable quarter. Earnings, however, were hurt by a $1.3 billion charge for the costs of various recalls, including for faulty ignition switches on 2.6 million cars.