BUSINESS

U.S. Auto Bailout Will Cost Billions More Than Previously Thought: Treasury

FILE - In this June 12, 2012 file photo, General Motors Chairman and CEO Daniel Akerson addresses shareholders at the company
FILE - In this June 12, 2012 file photo, General Motors Chairman and CEO Daniel Akerson addresses shareholders at the company's annual shareholder meeting in Detroit. A big loss in Europe dragged down General Motors' second-quarter profit. The automaker's net income from April through June fell 41 percent to $1.5 billion, $1 billion less than the same quarter a year earlier, GM said on Thursday, Aug. 2, 2012. A $361 million loss in Europe, coupled with $19 million of red ink in South America, pulled down strong performances in North America and Asia. In last year's second quarter, GM made $102 million in Europe before taxes. European nations are struggling to contain a debt crisis, weak economies and high unemployment, which have sapped car buying in the region.(AP Photo/Carlos Osorio)

WASHINGTON, Aug 13 (Reuters) - The U.S. Treasury Department has said the auto industry bailout will cost taxpayers $3.4 billion more than previously thought.

Treasury now estimates the 2009 bailout will eventually cost the government $25.1 billion, according to a report sent to Congress on Friday.

That is up from the last quarterly estimate of $21.7 billion.

Since the $80 billion bailout of the auto industry, Detroit's big automakers have moved from crisis to profit. GM and Chrysler were put through government-funded bankruptcies that slashed costs and debt.

Treasury has so far recouped about half of what was extended in grants and loans to GM and Chrysler, related retail financing arms and suppliers. Some of the money was repaid in cash, while the remaining interest was tied up in equity shares held by the government.

Republicans have long complained that the bailout was at least partly aimed at salvaging union jobs in Michigan and Ohio, which were hit hard by the 2007-09 recession.

President Barack Obama has campaigned heavily in those states on a signature economic policy achievement - the revival of U.S. auto manufacturing due to his intervention following its near-collapse soon after he took office.

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