General Motors Bail Out Essay

In 2009, the Obama Administration bailed out the General Motors and Chrysler automobile companies. Having begun their decent into bankruptcy in 2008, losing thousands of jobs, sales plummeting forty percent, with a high threat of liquidation, General Motors and Chrysler finally reached government-assisted chapter 11 bankruptcy in 2009. Obama allocated eighty five billion dollars in TARP funds to the auto industry, close to fifty billion dollars of it going to General Motors. The allocated funds were successful in keeping two of the Big Three auto companies afloat, keeping taxes from sky rocketing and saving millions of jobs.

In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of

On December 18th 2014 the auto industry bailout ordeal came to a close when the US Treasury Department sold the last of its stock in General Motors, for 19 billion dollars, in the end recouping about 39 billion out of 50.1 billion that was pumped into the Big Three automakers at the tail end of 2008 by the Bush and Obama administrations (Muller). The big question that comes up in the end of this ordeal by many people on both sides of the party line is that, was all this worth it? What would have happened if we didn’t bail out the automotive industry?

Suicides were abundant as fortunes were lost overnight, companies’ stocks were deemed worthless, and grand companies of manufacture, were split over the course of the day, a stock that was a great investment was now for all its merits worthless. Thousands, millions were lost, not only affecting the rich of the Americas, but the workers, and employees of the then near-default and defunct companies of this

In the United States there has been times of economic hardships for Americans. One of those hard times was during the Great Depression. This place in history was when agriculture, the banking system and our nation’s purchasing power was in turmoil. For many farmers droughts had taken a toll. Their farms were turned in large dust bowls and growing crops was almost impossible. The banking system was very volatile because of bad investments. Many of the banking institutions had invested a lot of money in the stock market and loaned businesses money in which they invested into the stock market. The stock market crashed on Black Tuesday in 1929. Billions of dollars were lost on this day. The conditions of the Great Depression called for some new

The Federal Reserve made emergency loans to the big companies in order to prevent large banks from failing when their investors frightened. With the stock market crashing, on October 3, 2008, President George Bush signed the Troubled Asset Relief Program into law. TARP used 250 billion dollars of federal money to “bail out” the banks, and later automakers including General Electric. Government-working accountants reviewed large Wall Street banks’ balance sheets and disclosed to the public which were sound in order to instill more confidence within investors.

“The Fed did not bailout Bear at taxpayer expense, but enabled – as it is mandated – the financial markets to continue to function. History will call the Fed’s action the right move at the right time”, says Jeremy Siegel, Ph.D. The Bear Stearns Company began a financial meltdown in July 2007. By March 2008, it was ready to file Chapter 11 bankruptcy. Some people believe that the Federal Reserve should not have stepped in to bailout Bear Stearns because it was rewarding reckless business behavior and Bear should have been left to file bankruptcy. The deal of Bear Stearns was not a government bailout; it was rather a loan to preserve jobs, homes, savings, the economy, the shareholders of Bear, and the financial

Recently, we have all heard about the financial crisis. Many industries have suffered beginning from the banks, the first and worst hit industry. Since many were retrenched, the consumer-based industries have suffered. This time, the auto industry was hit. Three big auto companies, General Motors, Daimler Chrysler LLC and Ford, were in trouble this time. The $14 billion emergency loan for the companies was cancelled as the Senate failed to approve of it. Why did they do so? What effects will it have?

An article published by the New York Times details Obama’s bailout. According to the article, the bailout was mainly focused towards the auto companies General Motors, and Chrysler. Evidently, this costly bailout was in vain. For example, cars such as the Focus and C-Max Hybrid were being sold at such a low rate that factories producing these vehicles were shut down for over three weeks. Also, due to low gas prices, automobile companies will have a harder time selling fuel efficient cars. This bailout is a great example of why the market should be allowed to regulate itself based on consumer demand. Libertarian economic policies are constructed with this value in

The government decided to take an equity stake at GM and thus was facing the possibility that a substantial amount of these funds would never be repaid. The government has already written off or realized losses of over $7 billion as of April 2012[2]. More losses will come as the government sells its remaining stake in GM and Ally Financial. The Congressional Budget Office estimates that the auto bailout will ultimately cost taxpayers a total of about $20 billion[3]. The Treasury Department is even more pessimistic, projecting that, at GM’s current stock price, taxpayers will lose $23 billion[4].

In the latter part of 2008, the United States’ economy was rapidly plummeting - the stock market crashed, the housing bubble burst and gas prices skyrocketed. The majority of U.S. based firms faced the reality that they would not be able to survive during such desperate economic times. The U.S. automobile industry, in particular, began to buckle under the depressed economy. The government stepped in proposing a multi-billion dollar bailout to stimulate the economy and restore economic balance. The possibility of this unprecedented government intervention was condemned by many economists. If the government helped the ailing automotive industry, this industry would have to tighten their expenditures and plan for the future to prove to

By 2008, the recession impacted the global marketplace, as automobile sales declined. This time period became problematic for GM since the company was near bankruptcy. After weeks on Capitol Hill in an effort save GM, an automotive bailout package was approved during the Obama Administration. Gm would receive bailout loans from the America, Canada, and the Ontarian governments to address the recession, record oil prices, and a serious global automotive crisis. As a result of GM’s bankruptcy filing, the company would reorganize itself. This meant that a popular brand like the Pontiac would be phased out, while GM focus on North American brands like Cadillac, GMC, Chevrolet, and Buick. In 2009, the old GM was replaced by the New GM in an effort

There is little argument among national policymakers that the American economy was severely horsewhipped by the Great Recession of 2008, and that the country has only recently recovered sufficiently for economists to breathe a sigh of relief that the corner has been turned. Likewise, there is virtually no argument among national policymakers that a healthy maritime industry is also an essential component of the American economy. Finally, there is significant historic precedent. The U.S. government has "bailed out" other industries and sectors in the past that were viewed as being "too large to fail" because of the potential adverse impact on the American economy. For instance, in his editorial, "Rebuilding America and Creating Jobs - A Jones Act Initiative," Munoz (2011) writes, "After bailing out the auto industry with $25 billion in loans and guarantees, the government turned around and provided another $25 billion for the industry to retool its plants to compete on world markets. The experiment succeeded, and American cars and trucks are now among the best in the world" (2).

The climax of the 2008-2009 financial crises, the largest ever since the Great Depression of the 1930s, witnessed the near collapse of multibillion-dollar industries in the United States. Concerns over the economic impact of the possible collapse of these industries compelled the then administration and Members of Congress to seek legislative options to salvage them. Consequently, two of the industry biggest players in the auto industries, General Motors and Chrysler, were offered financial support by the government and in return, shareholders and other stakeholders had to make necessary sacrifices in order to fundamentally restructure their businesses and commit to the tough decision of returning the companies to financial viability. In

Forwarded here with a term paper report on “General Motors Bankruptcy” submitted by Siddharth Dixit Enrollment No A7004611108 student of