Taxpayers Could Lose Billions from General Motors Revamp

"We believe that this restructuring will truly create viability for GM," the official said.

The administration source said that GM's board would be reorganized with some new faces and some from the old board. The official emphasized, however, that President Obama and the government will not be calling the shots and that they hoped that the board will make decisions about management and operations like any other board.

The official said Obama will not be briefed on a regular basis on actions taken by the board.

The official said up to an additional $30 billion could potentially be provided to GM as it reorganizes during bankruptcy. The Canadian government is expected to provide up to $9 billion.

In return for taxpayer money, GM will owe the two governments a total of $8 billion and the Treasury Department expects to recoup taxpayer funds through the nearly 73-percent stake both governments will own in the new GM.

"One thing that we have said consistently is the money that was put into both Chrysler and GM under the original loan agreements on December 31, that was not put in with the context of any fundamental restructuring," said the official. "Therefore we never anticipated there being a significant recovery on that money that went into either of those two companies."

The official said the billions provided in the first three months of this year came during a "very awkward time in our political system," citing both the holidays, the political transition from President Bush to Obama and the inauguration. The official said that money for both Chrysler and GM "really unfortunately didn't accomplish anything."

"We hope to recover as many taxpayer dollars as we can," said the official. "If we end up with $50 billion invested in this company across both administrations, it would be wonderful to recover more than $50 billion."

The official was optimistic about GM and recovering taxpayer money.

"We feel very good about GM's prospects. We feel very good about recovering the money that was invested and will be invested as part of this fundamental restructuring. If we end up recovering the earlier money as well, then nobody will be happier than the auto team here at Treasury and the White House," they said.

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