Watchdog says taxpayers stand to lose US$27 billion in bailout


AP

WASHINGTON — A government watchdog says U.S. taxpayers stand to lose US$27 billion from the 2008 financial bailout, up from an estimate of US$22 billion made in the fall.

A report issued Wednesday by the special inspector general for the Troubled Asset Relief Program says the estimate is higher because of increased losses for the Treasury Department on sales of shares in bailed-out companies.

Ally Financial, the former financial arm for General Motors, still owes US$14.6 billion of the US$17.2 billion in aid it received. The report says taxpayers can expect to lose US$5.5 billion on that investment because of the company’s losses on risky mortgages issued ahead of the financial crisis.

The report also criticized the Treasury for lacking a plan to unwind its investment in Ally. Taxpayers own 74 percent of the company.

Ally and GM together owe more than half of the US$67.3 billion still owed U.S. taxpayers by companies that were bailed out during the financial crisis, according to the quarterly report to Congress by Special Inspector General Christy Romero.

The total owed is down from US$84.2 billion as of Sept. 30, as banks and other financial companies have repaid their investments and Treasury has received proceeds from stock sales.