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President Obama loves taking credit for saving the American auto industry and this week a federal audit reveals that the rescue effort has fleeced U.S. taxpayers out of an astounding $9.7 billion.

While this may seem inconceivable to most, the numbers don’t lie. The United States Treasury has recorded a $9.7 billion loss on its $49.5 billion bailout of General Motors, according to a report released this week by the Special Inspector General for the Troubled Asset Relief Program (TARP). Remember the $700 billion boondoggle created to help stabilize the nation’s financial system during the 2008 crisis by purchasing “toxic assets?”

A chunk of the cash went to GM, the struggling Detroit-based auto maker that has publicly celebrated being clear from all government loans. In fact, GM held a ceremony at a Kansas City factory in 2010 to announce it had paid back $8.1 billion in government loans. “As of today, GM has repaid in full and interest,” the company’s CEO, Ed Whitacre, told the crowd. Obama has many times touted the success of the government’s bailout of GM.

To shove it down the nation’s collective throat as a triumph, numbers have been kept from the public until now. Part of the bailout included taxpayers’ ownership stake in GM, the forced purchase of so-called toxic assets. Not surprisingly, the stock sales have all taken place “below Treasury’s break-even price,” the TARP watchdog found. That means taxpayers must take the bewildering $9.7 billion hit.

The new report also documents billions of dollars in fraud and corruption associated with TARP throughout the nation. They include multi-million-dollar bank fraud and Ponzi schemes, foreclosure rescue scams and a number of other illicit operations using TARP funds. In fact the IG’s report discloses in detail many of the TARP-related crimes that have been prosecuted throughout the country, including more than a dozen states and the District of Columbia.

Getting back to the GM debacle, just a few weeks ago Judicial Watch revealed as part of an ongoing TARP investigation, that the government lost or wrote off $1.6 billion invested in GM since the beginning of this year alone. The figure came from Treasury documents obtained by JW. To get an idea of the rapid rate of loss, the files reveal a shocking $477 million loss during a small period between May 6 and the end of June.

 

 

 

The U.S. government continues hemorrhaging huge amounts of money on General Motors, despite the fanfare about the automaker repaying billions in government loans, a Judicial Watch investigation has found.

Since the beginning of the year the government lost or wrote off an astounding $1.6 billion invested in GM, according to Treasury figures obtained in the course of JW’s investigation. This includes a shocking $477 million during a small period between May 6 and the end of June, the records show.

As of the end of June, the government still has a 14% stake in GM and a 74% stake in Ally Financial (formerly GMAC), representing remaining investments of $17.2 billion and $14.6 billion, respectively. In all, the government has lost a perplexing $9.2 billion on its investment in GM, the Treasury records obtained by JW reveal.

In order to break even on its investment in GM the government would need to sell its remaining 189 million shares of the auto manufacturer for $95.51 a share. Currently, the stock is trading at a mere $37. That means that, barring an unforeseen spike in share values between now and the remaining scheduled sales, the government will lose another $11 billion from its GM investments.

While all this is going on, President Obama takes credit for saving the American auto industry, touting the success of the government’s bailout of GM. For its part, GM insists it is clear from all government loans. In fact, GM held a celebration at a Kansas City factory in 2010 to announce it had paid back $8.1 billion in government loans. “As of today, GM has repaid in full and interest,” the company’s CEO, Ed Whitacre, told the crowd.

While that may actually be true, American taxpayers keep losing astonishing sums of money in the seemingly never-ending GM bailout. The cash has flowed mostly through the Troubled Asset Relief Program (TARP), which was created to help stabilize the nation’s financial system during the 2008 crisis by purchasing “toxic assets.”

 

While American taxpayers bail out failing companies via the $700 billion Troubled Asset Relief Program (TARP), behind the scenes the Obama Treasury Department is awarding their top executives with millions of dollars in raises even though Congress passed a law forbidding it.

It’s an inconceivable scheme that rewards bad behavior with big bucks from taxpayers who have no say in the matter. In fact, the U.S. Treasury was forced by Congress to create rules against it yet a new federal audit reveals the agency repeatedly violates them to enrich the very people responsible for the companies’ failures (and need for a government bailout). The rescued firms include American International Group (AIG), General Motors Corp. (GM) and Ally Financial Inc.

Combined they have received an astounding $135 billion from Uncle Sam, according to government figures, yet the Treasury has approved 18 raises totaling $6.2 million for their top dogs. Half of the pay increases went to executives at GM, which got a whopping $50.2 billion bailout. One chairman at AIG, which is labeled “Systematically Significant Failing Institutions” by the Treasury, got an unbelievable $ 1 million raise. AIG has received $67.8 billion from TARP, according to the audit made public this week by the Special Inspector General for the Troubled Asset Relief Program.

The report is scathing and blasts the Treasury for repeatedly disregarding its own rules to approve fat raises for the heads of these rescued firms. In fact, the agency consistently approved cash salaries in excess of $500,000 for the CEO of each company that asked, the inspector general writes in the report, which says the GM, Ally and AIG executives continue to rake in multimillion-dollar pay packages approved by the Obama Treasury.

“While taxpayers struggle to overcome the recent financial crisis and look to the U.S. government to put a lid on compensation for executives of firms whose missteps nearly crippled the U.S. financial system, the U.S. Department of the Treasury continues to allow excessive executive pay,” the report says. It also explains how President Obama quickly implemented prohibitions on excessive pay for executives of bailed out firms after public outrage ensued in 2009 over press reports that TARP recipients paid billions in bonuses.

President Obama called the bonuses “shameful” and responded by setting salary caps for top executives, the audit points out, offering a rambling quote from the commander-in-chief: “In order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on

Wall Street. We all need to take responsibility. And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves customary lavish bonuses. As I said last week, this is the height of irresponsibility. It’s shameful. And that’s exactly the kind of disregard of the costs and consequences of their actions that brought about this crisis…what gets people upset – and rightfully so – are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves.”

Indeed a powerful statement from the nation’s leader that inspired the Treasury to issue guidelines proposing compensation limits on the same day he delivered it. Of course, the rules are only good for; say picking up dog poop, if they’re not enforced. The rest of the report, which spans 78 pages, is littered with a number of other enraging examples of how the government is rewarding the heads of failing companies that came to taxpayers for a rescue with their tail between their legs.

 

 

While the Obama Administration laughably claims that its disastrous bank bailout has turned a profit, a federal investigation reveals this week that hundreds of small financial institutions can’t afford to repay the government loans and its costing U.S. taxpayers tens of billions of dollars.

This is hardly earth-shattering news considering the well-documented history of the $700 billion Troubled Asset Relieve Program (TARP), the president’s brilliant idea to rescue the nation’s ailing financial institutions. Instead, it’s turned out to be a troubling experiment of U.S. tax dollars with virtually no oversight.

In the last few years a variety of federal probes have documented that TARP is severely mismanaged and that its rife with waste and abuse. In fact, a 2009 TARP Inspector General report revealed that dozens of criminal investigations had been launched into the controversial bailout experiment and that the risk would only grow. The probes have centered on securities fraud, tax law violations, mortgage modification fraud and insider trading involving recipients of the federal money.

A separate audit—by the Congressionally-created panel charged with overseeing the Treasury’s actions—divulged that the government actually paid collapsed mortgage giants Fannie Mae and Freddie Mac $240 million to help “administer” TARP. Think about it! These are the scandal-plagued mortgage companies that were seized by the government in 2008 getting millions more from taxpayers to “administer” yet another fraud-infested federal program.

This week the Special Inspector General for TARP revealed that the monstrous bailout program’s losses stand at about $60 billion and that financial institutions owe Uncle Sam a whopping $118.5 billion. Furthermore, hundreds of small banks can’t afford to repay the federal bailout loans so taxpayers will get stuck with the exorbitant tab, according to the TARP inspector general. Just last month the Congressional Budget Office (CBO) estimated that TARP would lose $32 billion.

TARP’s IG disclosed the latest figures to Congress in a 330-page report that outlines the bailout’s monumental failures. “It is a widely held misconception that TARP will make a profit,” the IG writes in the report. It goes on to say: “While TARP and other government responses to the financial crisis may have prevented the immediate collapse of our financial and auto manufacturing industries, and improved stability since 2008, the trade-off is not without profound long-term consequences.” A significant legacy of TARP is increased moral hazard and potentially disastrous consequences associated with institutions deemed ‘too big to fail.”’

Judicial Watch has been a frontrunner in investigating the administration’s handling of the nation’s financial crisis and has sued the U.S. Treasury Department to obtain records related to evaluation procedures used by the government to determine which financial institutions get TARP funds. As a result of the ongoing probe, JW obtained documents involving a controversial $12 million bailout grant provided to an unqualified Boston bank at the behest of California Congresswoman Maxine Waters and Massachusetts Congressman Barney Frank.

 

 

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