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One year ago, America's automakers were facing one of the worst sales slumps to ever hit the industry, the effects of which even caused two of them to file for bankruptcy. In response, the government attempted to bailout struggling firms in the auto industry by providing them with cheap loans funded by taxpayers. Americans were mixed about the bailout of the sector, with many fearing--including some experts--that taxpayers would lose every penny lent out.
President Barack Obama has now come out and put many of those fears to rest, announcing on Thursday that taxpayers will be repaid most of the auto industry bailout. Following the announcement, White House Press Secretary Robert Gibbs was quick to clarify that Obama was only referring to the $60 billion his administration loaned to the auto industry, not the $25 billion loaned under the Bush administration.
Obama’s confidence in the auto industry is riding on the fact that most of the firms that were helped with the bailout are now turning profits, including the biggest borrowers, GM and Chrysler.
Things are looking so rosy that the auto industry has already added 55,000 jobs in the year ending June 30, according to the White House, and another 11,000 jobs should be added by the Detroit automakers before the end of the year.
So far, GM has repaid about $7.7 billion of the $50.7 billion loan it received, with most of the remaining $43 billion converted into a majority stake in the automaker. Chrysler, on the other hand, still owes roughly $10 billion on its $12.8 billion loan.
Later today Obama will make his first trip to Detroit since being elected as president. He will be greeted by the CEOs of Chrysler and GM, Sergio Marchionne and Edward Whitacre Jr., as well as United Auto Workers chief Bob King.