Auto bailout could be tied to gov’t-run overhaul
BANK BAILOUT FAILURE – AP IMPACT: Some bailout holdings down $9 billion
Stock intended to eventually earn taxpayers a profit as part of the Bush administration’s massivehas lost a third of its value — about $9 billion — in barely one month, according to an Associated Press analysis. Shares in virtually every bank that received federal money have remained below the prices the government negotiated.
Most of the Treasury Department’s investments since late October have been in preferred bank stocks, more than $180 billion worth, with investments in giants like Citigroup and JPMorgan Chase, and many small community banks. But the government also negotiated options to buy up to 1.2 billion shares of common bank stock that was valued at $27 billion.
Now, however, the value of that common stock is worth less than $18 billion. If the government exercised all its warrants to purchase the stock today, it would lose money on 51 of its 53 agreements. Taxpayers would be out $9.1 billion.
“The markets are saying this plan isn’t going to work for the banks,” said Ross Levine, Tisch professor of economics at Brown University. “They’re asking where this plan is going.”
Filed under: Auto Industry, Auto Industry Bailout, Bailout, Bailout Failing, Bailout Opposition, Banking, Banking Crisis, Chrysler LLC, Ford Motor Company, General Motors, Tax Payer Rip Offs | Tagged: Auto Bailout, Banking Crisis, Detroit 3 Bailout, Failed Bank Bailout, Governmental Bailout |