Friday, December 19, 2014
December 19: George W. Bush saves GM and Chrysler on this date in 2008
Playing chicken with a fiscal cliff isn't a new game in Washington. In 2008, when Congress voted down a rescue package for General Motors, Chrysler and their finance arms, the pressure on then-President George W. Bush to keep the automakers in business until Barack Obama took office grew intense.
His top aides told Bush that letting GM and Chrysler collapse could trigger all kinds of financial calamity and up to 1 million lost jobs. So, under duress, Bush agreed to lend the companies $17.4 billion — just enough to get them through a few weeks.
To date, Chrysler has paid back most of its loans and today Ally Financial, the former financing arm of General Motors, has announced that the U.S. Treasury will sell its remaining 54.9 million shares in the bank, originally purchased under Bush's bailout.
With a closing price of $22.75, this should net around $1.25 billion. According to Reuters, the U.S. Treasury has already banked $18.3 billion from its original $17.2 billion investment in Ally. Most of that derived from when the financial company went public in April and the Treasury sold most of its stake.
Since Bush left office, he has defended the government bailout, saying that if given the same choice, he'd do it again.