Government Loss as Low as $19Bn in Auto Bailout

The Congressional Budget Office said it expected the government's loss on the auto industry bailout to be around $19 billion, down from its initial estimate of $34 billion. This announcement comes after the government received $13.6 billion in GM's IPO, including the exercise of the purchase of additional shares by its underwriters. Thanks to the biggest stock sale in history, GM is about two thirds the way through paying back the money it owes the taxpayers. The rest is expected to be paid back over the next few years.

The CBO said its "estimate of the cost of assistance to the automotive industry dropped from $34 billion to $19 billion because the auto companies have repaid or settled much of their outstanding debt with the Treasury and have continued to demonstrate some measure of financial stability."

The new estimate is slightly higher than the latest estimate the Treasury Department had released in October, predicting a mere $17 billion loss on the bailouts of GM, Chrysler and auto finance companies Ally Financial Inc. and Chrysler Financial LLC., in spite of the companies showing signs of recovery, such as GM being marginally profitable again. On the other hand, analysts say that GM needs to double its share price in order to fully repay its debt.

The auto industry bailout cost the state a staggering $85 billion. The CBO also predicts that Chrysler will draw down the remaining $2 billion from its line of credit with the Treasury.

The congressional agency predicts a total loss of $25 billion on the $700 billion Troubled Asset Relief Program that was used to bailout banks, insurance companies and the auto industry.