Administration’s Actions in Auto Bail Out Added To Unemployment, Audit Says

The Obama administration’s policies in steering the auto bailout drove unemployment up, according to an audit by the Office of Special Inspector General for the Troubled Assets Relief Program (SIGTARP).

“At a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls – all based on a theory and without sufficient consideration of the decisions’ broader economic impact,” the audit by SIGTARP Neil Barofsky stated.

“It is not at all clear that the greatly accelerated pace of the dealership closings during one of the most severe economic downturns in our Nation’s history was either necessary for the sake of the companies’ economic survival or prudent for the sake of the Nation’s economic recovery,” the audit added.

The federal government committed $80.7 billion out of TARP, the $700 billion rescue bill enacted in late 2008, to save General Motors and Chrysler. Chrysler closed 789 dealerships, while GM is set to have closed 1,454 dealerships by October 2010 as a cost cutting measure.

The Treasury Department pushed General Motors and Chrysler to close dealerships at a faster rate than the companies suggested, without taking job losses into consideration, the audit says.

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