The Role of TARP Assistance in the Restructuring of General Motors

March 18, 2014 (R41978)

Contents

Figures

Tables

Appendixes

Summary

In 2008 and 2009, collapsing world credit markets and a slowing global economy combined to create the worst market in decades for production and sale of motor vehicles in the United States and other industrial countries. Concern about the economic impact of a possible collapse of large parts of the U.S. automobile industry led both the Bush Administration and Members of Congress to seek legislative avenues to assist the automakers. Ultimately, General Motors Corporation (Old GM) and its successor General Motors Company (New GM) together received more than $50 billion in federal assistance through the U.S. government's Troubled Asset Relief Program (TARP). Using this assistance to restructure, GM closed plants, cut its hourly and salaried workforce, shed three brands, reduced debt, introduced new vehicles, and implemented changes to reduce retiree legacy costs.

In exchange for this financial support, the U.S. Treasury received 60.8% of the new company, with the rest of New GM held by the United Auto Workers (UAW) retiree health care trust fund, the governments of Canada and Ontario, and holders of Old GM's bonds. GM was not the only company that received TARP funds as a result of the 2008-2009 financial crisis. More than 700 institutions received support, with the U.S. government taking ownership stakes in five large companies: GM, Chrysler, GMAC (now called Ally Financial), AIG, and Citigroup. In general, ownership of private companies was not a goal of TARP, and the U.S. government has sought to reduce its ownership stakes when possible while maximizing the taxpayers' return from the assistance.

The federal government sold its shares in General Motors Co. in different ways over time, including (1) a large initial public offering (IPO) in late 2010, (2) sale of stock directly to GM in December 2012, and (3) ongoing sale of stock into the public market. For the U.S. government to have fully recouped the nominal value of its $50.2 billion assistance, the government would have had to receive an average price of more than $45 per share for its holdings. In reality, the government received between $27.50 and $38.32 per share as it sold stock between December 2010 and December 2013. GM stock reached its highest point since the 2010 IPO, nearly $42 a share, after the government finished selling its GM stock in December 2013.

Including both the sales of stock and principal recoupment, the government realized $11.2 billion in losses on the assistance for GM, which could be partially offset by $0.7 billion in net income for a final shortfall of $10.5 billion. With the final sale of stock, all of New GM's connections to TARP are complete. Restrictions arising from TARP participation, including a ban on New GM owning corporate jets, certain reporting requirements, and executive pay limits, have been eliminated.


The Role of TARP Assistance in the Restructuring of General Motors

Corporate Terminology in This Report

As a result of bankruptcy proceedings, there are two companies commonly referred to as "GM." Both are discussed in this report. General Motors Corporation, referred to in this report as "Old GM," filed for bankruptcy in June 2009. In July 2009, the majority of Old GM's assets and some of its liabilities were purchased by a new entity that was subsequently renamed "General Motors Company," referred to as "New GM." The term "GM" is used when both companies are referenced.

Similarly, there are two companies commonly referred to as "Chrysler." Both are discussed in this report. Chrysler LLC, referred to as "Old Chrysler," filed for bankruptcy in April 2009. In June 2009, the majority of Old Chrysler's assets and some of its liabilities were purchased by a new legal entity that was subsequently renamed "Chrysler Group," referred to as "New Chrysler." The term "Chrysler" is used when both companies are referenced.

GMAC, Inc., changed its general corporate identity to Ally Financial in May 2010, approximately a year after introducing the name Ally Bank for its banking subsidiary. Except for historical background and forward-looking statements, this report will refer to the corporation as GMAC/Ally Financial.1

Introduction

In 2008 and 2009, collapsing world credit markets and a slowing global economy combined to create the weakest market in decades for production and sale of motor vehicles in the United States and other industrial countries. U.S. light vehicle production fell by more than 34% in 2009 from 2008 levels, but the year-over-year fall-off was more acute for General Motors Corporation (Old GM), whose U.S. production dropped by 48%, and for Chrysler LLC (Old Chrysler), whose U.S. production fell by 57%.2 A similar pattern was reflected in U.S. light vehicle sales, which fell from just over 16.5 million units in 2007 to 10.4 million units in 2009.3

The production and sales slides were serious business challenges for all automakers, and rippled through the large and interconnected motor vehicle industry supply chain, touching suppliers, auto dealers, and the communities where automaking is a major industry. Old GM and Old Chrysler were in especially precarious positions. The immediate crisis that brought these two companies to bankruptcy was a loss of financial liquidity as the banking system's credit sources froze and neither company had enough internal reserves to weather the economic storm. As a result, they turned to the U.S. government for assistance in November 2008.

In December 2008 and the early months of 2009, both automakers and two auto-financing companies4 received federal financial assistance from the Bush and Obama Administrations. As discussed later in this report, that funding enabled Old GM and Old Chrysler to begin restructuring their operations, a process that was continued in bankruptcy court.

Alone among the world's major automakers, Old GM and Old Chrysler filed for bankruptcy in 2009 and, with oversight from the Obama Administration as well as the bankruptcy court, restructured their operations in an attempt to become more competitive companies. New boards of directors were appointed for both New GM and New Chrysler, with New GM's board members initially chosen by the U.S. Treasury Department. Both reorganized companies had sizable ownership stakes held by the U.S. government and the United Auto Workers (UAW) union's retiree healthcare trust.5

As auto markets improved in 2010, so too did New GM's balance sheet and its outlook. The company paid off its remaining $6.7 billion federal loan and repurchased $2.1 billion in preferred stock held by the U.S. government. This left the government holding more than 900 million shares of common equity received in return for assistance from the Troubled Asset Relief Program (TARP). The Treasury has reported that the effective original cost of these shares in New GM was $43.52 per share. Sales of stock made at lower prices result in losses being recorded by the Treasury.6

New GM's stock was offered in an initial public offering (IPO) in November 2010, with the U.S. government selling more than 412 million shares, thus reducing the government's ownership share to 32%. No shares were sold for over two years following the IPO.

The U.S. government began selling its remaining 500 million shares of New GM stock in December 2012, with the announced plan of divesting its remaining shares by early 2014. The final sales of GM stock closed ahead of this 2014 deadline, in December 2013. All of these sales were made at prices below the government's $43.52 per share average cost. (See "Assessing the Cost of TARP Assistance for GM," below, for more information.) These sales effectively end federal assistance to GM, although there are some government claims still outstanding in the bankruptcy process of Old GM.7

General Motors' Capital Crisis in 2008-2009

General Motors Corporation was a publicly traded company from 1916 until it filed for bankruptcy in June 2009.8 It faced a capital crisis in 2008 and 2009 because the normal avenues for raising capital were unavailable: auto sales were plummeting; the company had limited success in selling off assets; its efforts to cut costs were affected by the long timeline required to determine the efficacy of such steps; and sources of capital in the open market were frozen by the financial meltdown. As a consequence, the company's executives tried to arrange U.S. government bridge loans beginning in the fall of 2008.9 As Old GM's then-Chief Executive Officer (CEO) Fritz Henderson stated in the company's bankruptcy court filing:

By the fall of 2008, [Old GM] was in the midst of a severe liquidity crisis, and its ability to continue operations grew more and more uncertain with each passing day. The Company previously has recognized the need for bold action to modify and transform its operations and balance sheet to create a leaner, more efficient, productive and profitable business; and it had expended a tremendous amount of resources and effort, on operational, strategic partnering, and financial fronts, to accomplish this task. Unfortunately, because of the continuing and deepening recession, aggravated by the collapse of Lehman Brothers Holdings on September 15, 2008, GM was not able to achieve its objective. As a result of the economic crisis, the Company was compelled to seek financial assistance from the federal government.10

When capital markets are functioning normally, companies might arrange for debt financing through a major investment bank. In 2007, Alan Mulally, Ford Motor Company's president and CEO, arranged for Ford to borrow $23.5 billion to finance restructuring. Private capital was still available at that time, allowing Ford to mortgage all of its assets to obtain a large loan.

As Old GM's bankruptcy filing indicated, these avenues for raising capital were not available in 2008 and 2009. By then, Old GM was facing extreme financial stress, for several reasons:

Table 1. Top Sellers of Light Vehicles in the United States

(share of units sold)

Company

2000

 

2009

 

2013

General Motors

28.1%

 

19.9%

 

17.9%

Toyota

9.3%

 

17.0%

 

14.4%

Ford

23.1%

 

16.1%

 

15.9%

Honda

6.6%

 

11.0%

 

9.8%

Chrysler

11.7%

 

8.9%

 

11.6%

Source: Automotive News.

Notes: Ford data do not include Volvo, Land Rover, and Jaguar; GM data do not include Saab. Sales in 2000 are for Old GM and Old Chrysler. Sales in 2009 are the combined sales of Old GM/GM and Old Chrysler/Chrysler.

U.S. Government Assistance to the Motor Vehicle Industry

The initial U.S. government loans to assist the U.S. motor vehicle and motor vehicle financing industries were made by the George W. Bush Administration in December 2008 and January 2009. At that time, $24.8 billion in assistance was provided to four companies,17 the first of what would eventually total nearly $80 billion in assistance through the Troubled Asset Relief Program.18 TARP was authorized by the Emergency Economic Stabilization Act (EESA),19 enacted in the fall of 2008 to address the ongoing financial crisis. This statute specifically authorized the Secretary of the Treasury to purchase troubled assets from "financial firms," the definition of which did not mention manufacturing companies.20 According to the Treasury,

The overriding objective of EESA was to restore liquidity and stability to the financial system of the United States in a manner which maximizes overall returns to the taxpayers. Consistent with the statutory requirement, Treasury's four portfolio management guiding principles for the TARP are: (i) protect taxpayer investments and maximize overall investment returns within competing constraints; (ii) promote stability for and prevent disruption of financial markets and the economy; (iii) bolster market confidence to increase private capital investment; and (iv) dispose of investments as soon as practicable, in a timely and orderly manner that minimizes financial market and economic impact.21

The authorities within TARP were very broad. When Congress did not pass specific auto industry loan legislation,22 the Bush Administration turned to TARP for funding, arguing that failure to provide assistance to the auto industry would make the recession much worse and would impose other costs on federal taxpayers, such as providing unemployment benefits for displaced workers.

After it took office, in 2009, the Obama Administration built on this precedent, and both Chrysler and GM received additional TARP loans. GMAC/Ally Financial received additional capital infusions, enabling the company to survive the downturn in the auto market as well as large losses on its mortgage operations. Chrysler Financial, in contrast, required no additional aid and relatively quickly repaid the TARP loan it received. The assistance for the auto industry was not without controversy, and questions were raised about the legal basis for the assistance and the manner in which it was carried out.23

Table 2 summarizes the TARP assistance given to the U.S. motor vehicle manufacturing and financing industries.24

Table 2. Summary of TARP Assistance for U.S. Motor Vehicle Industry

($ in billions)

Company

Current Government Ownership Share

Total TARP Assistance

Principal Recouped to Date by the Treasury

Principal Losses Realized by the Treasury

Income/Revenue Received from TARP Assistance

Outstanding TARP Assistance

Chrysler

0%

$10.9

$7.9

-$2.9

$1.7

$0

Chrysler Financial

Not Applicable

$1.5

$1.5

$0

$0.02

$0

GM

0%
(New GM)

$50.2

$39.0

-$11.2

$0.7

$0

GMAC/Ally Financial

37.0%

$17.2

$10.7

$0

$4.6

$5.7

Source: U.S. Treasury, Daily TARP Update, February 28, 2014; Troubled Asset Relief Program: Monthly 105(a) Report, various dates.

Note: Figures may not sum due to rounding. In December 2008, the Treasury provided $884 million to assist GM in GMAC's rights offerings, separate from the funds loaned for GM's operations. While the funds were provided to GM, they are included in the GMAC/Ally assistance as they resulted in nearly half the government stake in GMAC. Income received included dividends, interest, warrants sold, and may be offset by disposition expenses.

U.S. Government Assistance for GM Through Bankruptcy

In December 2008, Old GM received $13.4 billion from the U.S. Treasury, the first of several loans made through TARP. Old GM received additional loans from TARP of $2 billion in April and $4 billion in May 2009. These loans kept Old GM's operations alive as it went through a drastic restructuring overseen by the Auto Task Force. (A complete listing of GM's TARP loans and related payments to the government can be found in the Appendix.)

Old GM's Viability Plan of February 2009, which was a U.S. Treasury requirement to obtain additional loans after the initial loan of December 2008, laid out a plan of recovery based on changes in operations, labor costs, and other factors. President Obama rejected that plan at the end of March 2009, saying it was insufficient for a total recovery of the company. The Administration gave Old GM two months, until June 1, to devise a more thorough restructuring and thereby qualify for more U.S. government aid.25

Throughout the spring of 2009, Old GM worked with various stakeholders, including the UAW, bondholders, creditors, dealers, and suppliers, to devise a new restructuring plan that would be approved by the Auto Task Force and avert bankruptcy. While the company succeeded in reaching tentative agreements with most stakeholders, a group of creditors would not agree to the terms offered, thus prompting GM to file for bankruptcy on June 1, 2009.

During the bankruptcy proceedings, the government provided a final installment from TARP: a $30 billion loan to facilitate the transformation to a new, smaller company, bringing total U.S. government loans related to GM to more than $50 billion. While much of the $30 billion was used by GM during the restructuring process, a majority of it was not used, and $16.4 billion remained in an escrow account on September 30, 2009.26 One continuing issue from the bankruptcy that has drawn particular congressional interest is the treatment of some retirees of Delphi Corporation, which had been a GM subsidiary until 1999, as Old GM had certain liabilities related to Delphi's pension plans. The House Committee on Oversight and Government Reform held two hearings on the GM assistance and Delphi pension issues during the 112th Congress.27 In addition, legislation entitled the Delphi Pensions Restoration Act of 2012 was introduced in both the House (H.R. 6404) and the Senate (S. 3544).28 To date in the 113th Congress, the House Committee on Oversight and Government Reform has held two additional subcommittee hearings focusing on Delphi pension issues.29

GM also benefited financially during and after the bankruptcy process from previous policy rulings by the Internal Revenue Service (IRS).30 Under normal circumstances, a corporation undergoing bankruptcy is not able to carry forward previous tax losses, since the bankruptcy process is considered a change in the control of the company.31 Government holdings through TARP, however, generally have not been treated by the IRS as causing such a change in control. Because of this, New GM was able to carry forward $45 billion in losses and other costs incurred by Old GM, allowing it to avoid paying taxes on future profits for up to 20 years. Included in this figure are net operating losses of approximately $16 billion.32 These tax savings are not counted as part of TARP support. In theory, these tax rulings should have raised the value of the shares held by the Treasury as well as those held by other common shareholders.

Post-Bankruptcy General Motors

A new company was established in July 2009, after just 40 days in federal bankruptcy proceedings. New GM began with smaller U.S. operations than its predecessor company and a major presence overseas. GM operates as five divisions: GM North America (GMNA), GM Europe (GME), GM South America (GMSA), GM Financial, and GM International Operations (GMIO).33 In 2012, over 47% of GM's vehicle sales were outside North America and Europe, primarily in developing countries in Asia. In China alone, in the first nine months of 2013, GM's joint ventures sold more than 2.3 million vehicles, approximately 32% of all its worldwide sales.34

Table 3 shows GM's sales and earnings worldwide from 2010 through 2012. It is noteworthy that GM's North American sales are more lucrative, as the larger cars, pickup trucks, and SUVs widely sold in North America carry higher profit margins than the smaller vehicles popular elsewhere in the world. Of the $7.9 billion earned in 2012, $7.0 billion was earned in North America. Most other divisions lost money or broke even; GM's GMIO division earned $2.2 billion.35

Table 3. General Motors Company Results

(comparing 2010, 2011, and 2012)

 

Net Sales & Revenue

Vehicles Sold
Worldwide

Earnings before Interest and Taxes


2010
2011
2012


$135.6 billion
$150.3 billion
$152.3 billion


8.3 million
9.0 million
9.3 million


$7.0 billion
$8.3 billion
$7.9 billion

Source: GM Annual Reports, 2011 and 2012.

Notes: Revenues are before intercompany transfers and corporate and other eliminations.

According to GM, since 2009, it has announced investments of $10.1 billion in its U.S. facilities, creating or retaining more than 26,500 jobs.36 GM's annual reports show its worldwide employment in Table 4, by major corporate divisions.

Table 4. General Motors Co. Worldwide Employment

(yearend, in thousands)

GM Unit

2010

2011

2012

GMNA

96

98

101

GME

40

39

37

GMIO

32

34

39

GMSA

31

33

32

GM Financial

3

3

4

Total Worldwide

202

207

213

Source: "Highlights," General Motors Company 2011and 2012 Annual Reports.

The New GM of 2009 differed in a number of ways from the Old GM:37

The U.S. government was the majority owner of the company that emerged from the bankruptcy process, as the majority of the TARP loans made to GM were converted into an initial 60.8% government ownership stake in New GM. In addition, $6.7 billion of the TARP loans remained outstanding after the bankruptcy and the U.S. government received $2.1 billion in preferred stock.38 Following positive financial results in the quarters after emerging from bankruptcy, New GM used cash in the escrow account that held its TARP borrowings to pay off the $6.7 billion in outstanding loans by April 2010.39 The $2.1 billion in preferred stock was repurchased by New GM in December 2010, following the company's IPO.40

Elements of U.S. Government Ownership

In addition to its ownership of GM, the U.S. government acquired large common ownership stakes in Chrysler, GMAC/Ally Financial, Citigroup, and AIG through TARP funds and other assistance during the financial crisis. It has sold its stakes in Citigroup, Chrysler, GM and AIG, retaining only the large common shareholdings in Ally Financial. Table 5 details the government ownership stakes in these companies.

Exercising managerial control was not a stated goal of acquiring shareholdings in these companies. Instead, the stated purpose was to compensate taxpayers for the assistance given the companies while not saddling the companies with large liabilities that could hinder recovery. The Obama Administration laid out four core principles to guide the management of the government's ownership stakes:

Disposing of large ownership stakes in companies can be done in a variety of manners, including large-scale public offerings of shares, negotiated sales of large blocks of shares to other entities, and gradual share sales in the stock market. All of these sales methods have been used by the government in disposing of holdings of the companies discussed here.

Following its emergence from bankruptcy, New GM was not publicly traded, thereby precluding a gradual sale of stock into the stock market, as was done in the case of the U.S. government's holdings in Citigroup. The size of the company and of the government's stake in New GM made a negotiated private sale to another entity unlikely, and any private sale would have been subject to questions about whether the government received a fair price. Thus, the U.S. government chose to participate in an initial public offering in which it and other shareholders could sell significant amounts of their GM stock. In December 2012, the U.S. government also sold 200 million shares directly to GM at a 7.9% premium over the market price at the time. It sold the remaining shares in stages, ending with a final sale on December 9, 2013.

Table 5. Companies in Which the U.S. Government held Large Stakes under TARP

Company

Current Government Ownership Share

Maximum Government Ownership Share

Method of Sale of Ownership Stake

GM

0%

60.8%

Initial public offering, sale to GM, and gradual public sale of stock

Chrysler

0%

9.9%

Negotiated sale

GMAC/Ally Financial

37.0%

73.8%

Private sale of stock

AIG

0%

92%

Secondary public offering and gradual sale of stock

Citigroup

0%

34%

Gradual sale of stock

Source: U.S. Treasury, Troubled Asset Relief Program: Monthly 105(a) Report, various dates.

Note: Some of the government ownership in AIG resulted from a Federal Reserve loan, not from TARP assistance. The government ownership stake in Ally was diluted due to a private placement sale of newly issued Ally shares to private investors, not due to the sale of existing government shares.

Figure 1 shows the ownership structure of GM in 2009 when the new company emerged from bankruptcy and its structure after the Treasury sold the last of its stock in December 2013.

Figure 1. GM Ownership Structure

(2009 vs. 2014)

Source: General Motors Company.

Note: The 2009 ownership structure is how the new company emerged from bankruptcy.

Assessing the Cost of TARP Assistance for GM

As detailed in the Appendix, the U.S. government through TARP aided the combined Old GM and New GM with approximately $50.2 billion in loans in 2008-2009. After the bankruptcy process in 2009, the government held the following assets: (1) 60.8% of the equity in New GM, (2) $7.4 billion in loans aiding New GM, (3) $2.1 billion in preferred stock, and (4) nearly $1 billion in claims on the old GM in the bankruptcy process.

The government recouped the following from the assistance:

These, like all proceeds from TARP, are specified by the TARP statute to "be paid into the general fund of the Treasury for reduction of the public debt."42 The total recoupment from the GM assistance sums to approximately $39.7 billion. Comparing this amount to the $50.2 billion in loans results in an approximately $10.5 billion gap between the amount outlaid and the amount recouped.

The $10.5 billion shortfall between outlays and recoupment, however, is not the sole method economists might use to establish whether the government gained or lost on the assistance. In assessing the extent to which the government has recovered its investment, economists might also include a number of other factors, such as the cost to the government to borrow the funds that it then provided to GM, a premium to compensate the government for the riskiness of the loans, and the cost to the government of managing the assistance given.

The budgetary scores produced by the Congressional Budget Office (CBO) and the Office of Management of Budget (OMB) have taken some of these additional factors into account. The TARP statute required that TARP assistance be scored in the government budget in a similar manner to loans and loan guarantees under the Federal Credit Reform Act.43 Specifically, the expected present value of actions under TARP is to be estimated using risk-adjusted market interest rates and reflected on the federal budget at the time of the estimate. The estimates produced according to these formulas, however, have only been reported in aggregate. For example, CBO estimated in May 2013 that the budgetary cost of TARP assistance for the entire auto industry would be $17 billion,44 and the Treasury in coordination with OMB estimated lifetime cost as of September 30, 2013, to be $14.7 billion.45 Neither of these analyses, however, reports separately the individual gains or losses on Chrysler, GM, and GMAC/Ally Financial. No complete cost estimate has been performed since the final sale of GM stock.

Appendix. U.S. Government Financial Support for GM through the Troubled Asset Relief Program

Date

Recipient/Source

Amount
($ in billions)

December 2008

Old GM

$13.4

April 2009

Old GM

$2.0

May 2009

Old GM

GM Warranty Program

$4.0

$0.4

June 2009

Old GM/New GM

$30.1

April 2009-April 2010

GM Supplier Receivables Program

$0.3

Total Funds Loaned

 

$50.2

Recoupment of Principal

November 2009

Partial repayment of Supplier Receivables loans

$0.1

December 2009/January 2010

Partial debt repayment

$1.0

February 2010

Partial repayment of Supplier Receivables loans

$0.1

March 2010

Partial debt repayment

$1.0

April 2010

Final debt repayment

Final repayment of Supplier Receivables loans

$4.7

$0.1

July 2010

Repayment for Warranty Program

$0.4

November 2010

Proceeds from sale of common equity

$13.5

December 2010

Repurchase of preferred stock

$2.1

March 2011-January 2014

Partial repayment from bankruptcy proceeds

$0.2

December 2012

Proceeds from sale of common equity

$5.5

April 2013

Proceeds from sale of common equity

$1.6

June 2013

Proceeds from sale of common equity

$1.0

September 2013

Proceeds from sale of common equity

$3.8

November 2013

Proceeds from sale of common equity

$2.6

December 2013

Proceeds from sale of common equity

$1.2

Total

 

$39.0

Income Received

December 2008-April 2009

Interest on Old GM loans

$0.1

April 2009-April 2010

Interest for GM Supplier Receivables

$0.01

March 2010

Additional Note for GM Supplier Receivables

$0.1

October 2009-April 2010

Interest on New GM loans

$0.3

September 2009-December 2010

Dividends on preferred stock

$0.3

December 2010

Gain on preferred stock sale

$0.04

Total

 

$0.8 ($0.7 after offset for expenses)

Sources: U.S. Department of the Treasury, Daily TARP Update for 12/31/2013, TARP Transactions Reports, January 2, 2014, and TARP Dividends and Interest Report, various dates.

Note: Figures may not sum due to rounding. In December 2008, the Treasury provided $884 million to assist GM in GMAC's rights offerings, separate from the $13.4 billion loaned for GM's operations. While this was provided to GM, it is not tallied here as it ultimately resulted in holdings of GMAC common equity.

Footnotes

1.

For a discussion of U.S. government assistance to GMAC/Ally Financial, see CRS Report R41846, Government Assistance for GMAC/Ally Financial: Unwinding the Government Stake, by [author name scrubbed] and [author name scrubbed].

2.

Other automakers' U.S. production fell as well: Toyota's by 28%, Honda's by 27%, and Ford's by 13%. Source: "North American Car and Truck Production," Automotive News, January 11, 2010. GM and Chrysler sales in 2008 were made by Old GM and Old Chrysler; 2009 sales include sales made by both entities before they filed for bankruptcy as well as sales made by new GM and new Chrysler after bankruptcy.

3.

U.S auto sales for most of the decade 2000-2009 were above 16 million units per year. Ward's, Ward's Motor Vehicle Facts & Figures 2009, "U.S. Retail Sales of Cars and Trucks."

4.

At the time, Chrysler Financial and GMAC were both owned by Cerberus Capital Management.

5.

See Figure 1 for the details of the ownership structure of GM. For more information on Chrysler, see CRS Report R41940, TARP Assistance for Chrysler: Restructuring and Repayment Issues, by [author name scrubbed] and [author name scrubbed].

6.

GM stock hit a high point (since its IPO) of nearly $42 per share on December 26, 2013, after the government divestment was complete.

7.

These claims, currently totaling over $800 million, seem unlikely to result in substantial further recoveries to the government compared with the $10.3 billion in reported losses. The latest reported recoveries (December 27, 2013) were $410,000.

8.

William J. Holstein, Why GM Matters: Inside the Race to Transform an American Icon (Walker & Company, 2009), p. 4.

9.

A bridge loan is a temporary, short-term loan made with the expectation that it will be repaid as soon as longer-term financing can be arranged.

10.

Affidavit of Frederick A. Henderson Pursuant to Local Bankruptcy Rule 1007-2, U.S. Bankruptcy Court, Southern District of New York, filed June 1, 2009.

11.

Automotive News, "US Car and Light Truck Sales by Make—12 Months 2009," January 5, 2010, and "US Car and Light Truck Sales by Make—12 Months 2008," January 12, 2009.

12.

Jeff Green and Caroline Salas, "GM Said to Speed Cutbacks to Lower Break-Even Point," Bloomberg, April 22, 2009, at http://www.bloomberg.com/apps/news?sid=aOloQhPHrqX0&pid=newsarchive.

13.

Julie Appleby and Sharon Silke Carty, "Ailing GM Looks to Scale Back Generous Health Benefits," USA Today, June 23, 2005.

14.

Bill Visnic, "UAW Cornered on VEBA?," Edmunds, February 27, 2009, at http://www.autoobserver.com/2009/02/uaw-cornered-on-veba.html.

15.

The Auto Task Force was established by the Obama Administration in February 2009, was chaired by Treasury Secretary Geithner and composed of officials from a wide range of U.S. government agencies, including the departments of Labor, Commerce, and Transportation. On a day-to-day basis, the task force was managed for most of 2009 by Steven Rattner and in 2010 by Ron Bloom.

16.

Affidavit of Frederick A. Henderson, part of General Motors filing in the U.S. Bankruptcy Court, Southern District of New York, June 1, 2009, pp. 18-19.

17.

The loan recipients and the initial loans they received from the Bush Administration in December 2008 and January 2009 were as follows: General Motors Corporation ($14.3 billion), Chrysler LLC ($4 billion), GMAC ($5.0 billion), and Chrysler Financial ($1.5 billion).

18.

For more information on TARP see CRS Report R41427, Troubled Asset Relief Program (TARP): Implementation and Status, by [author name scrubbed].

19.

P.L. 110-343; 122 Stat. 3765.

20.

P.L. 110-343, Division A, Section 3.

21.

TARP, "Monthly 105(a) Report to Congress," U.S. Department of the Treasury, July 2010, p. 10.

22.

In December 2008, the House of Representatives passed H.R. 7321, authorizing the use of certain Department of Energy funds as bridge loans to GM and Chrysler. Passed 237-170, the bill was not acted upon in the Senate. For a complete description of Congress's consideration of auto industry loan legislation in the fall of 2008, see out-of-print CRS Report R40003, U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring, coordinated by [author name scrubbed] (available upon request).

23.

See, for example, Congressional Oversight Panel (COP), September Oversight Report: The Use of TARP Funds in Support and Reorganization of the Domestic Automotive Industry, September 9, 2009. This panel was created by the Emergency Economic Stabilization Act of 2008. COP's statutory authorization and website have expired, but its reports can be found at http://cybercemetery.unt.edu/archive/cop/20110401222823/http:/cop.senate.gov/.

24.

A more detailed accounting of the assistance for GM can be found in CRS Report R41401, General Motors' Initial Public Offering: Review of Issues and Implications for TARP, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

25.

Old Chrysler's Viability Plan was also rejected by the Obama Administration, and it was given 30 days to restructure.

26.

General Motors Company, Form 10-Q Quarterly Report, April 7, 2010, p. 37.

27.

U.S. Congress, House Committee on Oversight and Government Reform, Delphi Pension Fallout: Federal Government Picked Winners & Losers, So Who Won and Who Lost?, 112th Cong., 1st sess., November 14, 2011, at http://oversight.house.gov/hearing/delphi-pension-fallout-federal-government-picked-winner-and-losers-so-who-won-and-who-lost/; and U.S. Congress, House Committee on Oversight and Government Reform, The Administration's Auto Bailouts and the Delphi Pension Decisions: Who Picked the Winners and Losers?, 112th Cong., 2nd sess., July 10, 2012; at http://oversight.house.gov/hearing/the-administrations-auto-bailouts-and-the-delphi-pension-decisions-who-picked-the-winners-and-losers/.

28.

For more information on issues surrounding Delphi Corporation pensions, please see CRS Report R42076, Delphi Corporation: Pension Plans and Bankruptcy, by [author name scrubbed].

29.

U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on Government Operations, Field Hearing: The Delphi Pension Bailout: Unequal Treatment of Retirees, 113th Cong., 1st sess., June 10, 2013, at http://oversight.house.gov/hearing/the-delphi-pension-bailout-unequal-treatment-of-retirees/; and U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on Government Operations, Oversight of the SIGTARP Report on Treasury's Role in the Delphi Pension Bailout, 113th Cong., 1st sess., September 11, 2013 at http://oversight.house.gov/hearing/oversight-of-the-sigtarp-report-on-treasurys-role-in-the-delphi-pension-bailout/.

30.

IRS notices on this issue include Notice 2008-100, I.R.B. 2008-44, October 14, 2008; Notice 2009-14, I.R.B. 2009-7, January 30, 2009; Notice 2009-38, I.R.B. 2009-18, April 13, 2009; and Notice 2010-2, I.R.B. 2010-2, December 14, 2009.

31.

The tax code generally does not permit such assumption of tax losses in order to discourage companies from making acquisitions solely for the purpose of assuming tax losses.

32.

"GM's Tax Shelter," Wall Street Journal, July 31, 2009.

33.

GM's GMIO Division includes Asia Pacific, Africa, Middle East and Russia; China is the largest GM market in GMIO.

34.

CRS analysis of GM Chart Set, Third Quarter 2013 Results, released October 30, 2013.

35.

CRS analysis of GM Chart Set, CY 2012 Results, February 14, 2013.

36.

. GM Press Release, "GM Invests Nearly $1.3 Billion for Five U.S. Plant Upgrades," December 16, 2013, http://media.gm.com/content/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2013/Dec/1216-investments.html.

37.

Old GM—General Motors Corporation—remains in bankruptcy and is officially the Motors Liquidation Company, with the assets and liabilities that were not attached to the new General Motors Company.

38.

Preferred stock is an equity instrument, but it does not confer any control over the company and typically has a set dividend rate to be paid by the company; it is similar economically to debt, except that in most cases the issuer may waive dividend payments on preferred stock under certain circumstances.

39.

According to the Special Inspector General for TARP, "all of these payments were made, with Treasury's permission, using funds from the escrow account that held TARP funds provided to GM." "Quarterly Report to Congress," Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), July 21, 2010, p. 108.

40.

U.S. Treasury, "General Motors to Repurchase Treasury Preferred Stock," press release, October 28, 2010, http://financialstability.gov/latest/pr_10282010.html.

41.

U.S. Treasury, "FACT SHEET: Obama Administration Auto Restructuring Initiative," press release, June 1, 2009, http://www.financialstability.gov/latest/05312009_gm-factsheet.html.

42.

P.L. 110-343 §106(d). The statute does not specifically mention dividend receipts. In general, however, incoming funds are remitted to the Treasury's general fund, so even if TARP dividends are not considered to be covered by this section, the funds would still flow to the same place.

43.

2 U.S.C. §§661-661f.

44.

Congressional Budget Office, Report on the Troubled Asset Relief Program—May 2013, October 23, 2013, p. 5, available at http://cbo.gov/publication/44256.

45.

U.S. Treasury, Troubled Asset Relief Program: Monthly 105(a) Report—November 2013, December 10, 2013, p. 5, available at http://www.treasury.gov/initiatives/financial-stability/reports/Pages/default.aspx.