In 2008 and 2009, collapsing world credit markets and a slowing global economy combined to create the weakest market in decades for production and sale of motor vehicles in the United States and other industrial countries. U.S. light vehicle production fell by more than 34% in 2009 from 2008 levels, but the year-over-year fall-off was more acute for General Motors Corporation (Old GM), whose U.S. production dropped by 48%, and for Chrysler LLC (Old Chrysler), whose U.S. production fell by 57%. A similar pattern was reflected in U.S. light vehicle sales , which fell from just over 16.5 million units in 2007 to 10.4 million units in 2009. The production and sales slides were serious business challenges for all automakers, and rippled through the large and interconnected motor vehicle industry supply chain, touching suppliers, auto dealers, and the communities where automaking is a major industry. Old GM and Old Chrysler were in especially precarious positions. The immediate crisis that brought these two companies to bankruptcy was a loss of financial liquidity as the banking system's credit sources froze and neither company had enough internal reserves to weather the economic storm. As a result, they turned to the U.S. government for assistance in November 2008. In December 2008 and the early months of 2009, both automakers and two auto-financing companies received federal financial assistance from the Bush and Obama Administrations. As discussed later in this report, that funding enabled Old GM and Old Chrysler to begin restructuring their operations, a process that was continued in bankruptcy court. Alone among the world's major automakers, Old GM and Old Chrysler filed for bankruptcy in 2009 and, with oversight from the Obama Administration as well as the bankruptcy court, restructured their operations in an attempt to become more competitive companies. New boards of directors were appointed for both New GM and New Chrysler, with New GM's board members initially chosen by the U.S. Treasury Department. Both reorganized companies had sizable ownership stakes held by the U.S. government and the United Auto Workers (UAW) union's retiree healthcare trust. As auto markets improved in 2010, so too did New GM's balance sheet and its outlook. The company paid off its remaining $6.7 billion federal loan and repurchased $2.1 billion in preferred stock held by the U.S. government. This left the government holding more than 900 million shares of common equity received in return for assistance from the Troubled Asset Relief Program (TARP). The Treasury has reported that the effective original cost of these shares in New GM was $43.52 per share. Sales of stock made at lower prices result in losses being recorded by the Treasury. New GM's stock was offered in an initial public offering (IPO) in November 2010, with the U.S. government selling more than 412 million shares, thus reducing the government's ownership share to 32%. No shares were sold for over two years following the IPO. The U.S. government began selling its remaining 500 million shares of New GM stock in December 2012, with the announced plan of divesting its remaining shares by early 2014. The final sales of GM stock closed ahead of this 2014 deadline, in December 2013. All of these sales were made at prices below the government's $43.52 per share average cost. (See " Assessing the Cost of TARP Assistance for GM ," below, for more information.) These sales effectively end federal assistance to GM, although there are some government claims still outstanding in the bankruptcy process of Old GM. General Motors Corporation was a publicly traded company from 1916 until it filed for bankruptcy in June 2009. It faced a capital crisis in 2008 and 2009 because the normal avenues for raising capital were unavailable: auto sales were plummeting; the company had limited success in selling off assets; its efforts to cut costs were affected by the long timeline required to determine the efficacy of such steps; and sources of capital in the open market were frozen by the financial meltdown. As a consequence, the company's executives tried to arrange U.S. government bridge loans beginning in the fall of 2008. As Old GM's then-Chief Executive Officer (CEO) Fritz Henderson stated in the company's bankruptcy court filing: By the fall of 2008, [Old GM] was in the midst of a severe liquidity crisis, and its ability to continue operations grew more and more uncertain with each passing day. The Company previously has recognized the need for bold action to modify and transform its operations and balance sheet to create a leaner, more efficient, productive and profitable business; and it had expended a tremendous amount of resources and effort, on operational, strategic partnering, and financial fronts, to accomplish this task. Unfortunately, because of the continuing and deepening recession, aggravated by the collapse of Lehman Brothers Holdings on September 15, 2008, GM was not able to achieve its objective. As a result of the economic crisis, the Company was compelled to seek financial assistance from the federal government. When capital markets are functioning normally, companies might arrange for debt financing through a major investment bank. In 2007, Alan Mulally, Ford Motor Company's president and CEO, arranged for Ford to borrow $23.5 billion to finance restructuring. Private capital was still available at that time, allowing Ford to mortgage all of its assets to obtain a large loan. As Old GM's bankruptcy filing indicated, these avenues for raising capital were not available in 2008 and 2009. By then, Old GM was facing extreme financial stress, for several reasons: Decline in the U.S. auto market. In 2008 and the first half of 2009, U.S. auto sales were in a freefall, ultimately dropping further than at any time in three decades. The 2009 combined U.S. sales of Old GM and GM fell by 30% (compared with 2008 sales), a much steeper decline than any other automaker, except the combined sales of Old Chrysler and Chrysler. The decline in sales further dried up financial resources that Old GM could have used. Steady loss of U.S. market share. General Motors—which at its peak sold 51% of all autos in the United States—saw its market share slide from over 28% in 2000 to under 20% in 2009 (see Table 1 below). Break-even point for car making was too high. The break-even point is the volume of sales at which net sales (i.e., gross sales less discounts, returns, and freight costs) equal costs. According to Old GM, sales in the U.S. market would have needed to hit a rate of 11.5 million to 12 million vehicle units a year for it to break even. U.S. sales in 2009 were 10.4 million units. Exceptional labor and retiree health care costs. The Detroit 3 automakers (Old GM, Ford, and Old Chrysler) negotiated contracts with the UAW over the years that expanded benefits for union workers to a level the companies could not sustain when imported vehicles began to take large shares of the U.S. market. Old GM estimated that its retiree health care and pension costs added $1,500 to the cost of every U.S.-made vehicle and exceeded the cost of the steel used in the vehicles. At the time of the bankruptcy, Old GM had obligations of nearly $30 billion to fully fund retiree health care and pension funds. Corporate culture. It was alleged at the time of bankruptcy that Old GM's corporate executives had been too bureaucratic and out of touch with U.S. car buyers' preferences. The Auto Task Force at the Treasury Department, which oversaw restructuring of Old GM (and Old Chrysler), repeatedly said that changing GM's senior executive corps and the internal corporate culture would be one of the most important steps in Old GM's transformation to a more competitive company. The Obama Administration's firing of Old GM's then-chairman and CEO, Rick Wagoner, in 2009, and its appointment of new board members and a new chairman and CEO, were intended, in part, to emphasize to all stakeholders the importance of changing the business model. Higher gasoline prices. In 2008, gasoline prices rose to over $4 a gallon in many parts of the United States, adversely affecting demand for large vehicles with low fuel efficiency. These vehicles, such as pickup trucks and sport utility vehicles, had been critical to Old GM's profitability. The initial U.S. government loans to assist the U.S. motor vehicle and motor vehicle financing industries were made by the George W. Bush Administration in December 2008 and January 2009. At that time, $24.8 billion in assistance was provided to four companies, the first of what would eventually total nearly $80 billion in assistance through the Troubled Asset Relief Program. TARP was authorized by the Emergency Economic Stabilization Act (EESA), enacted in the fall of 2008 to address the ongoing financial crisis. This statute specifically authorized the Secretary of the Treasury to purchase troubled assets from "financial firms," the definition of which did not mention manufacturing companies. According to the Treasury, The overriding objective of EESA was to restore liquidity and stability to the financial system of the United States in a manner which maximizes overall returns to the taxpayers. Consistent with the statutory requirement, Treasury's four portfolio management guiding principles for the TARP are: (i) protect taxpayer investments and maximize overall investment returns within competing constraints; (ii) promote stability for and prevent disruption of financial markets and the economy; (iii) bolster market confidence to increase private capital investment; and (iv) dispose of investments as soon as practicable, in a timely and orderly manner that minimizes financial market and economic impact. The authorities within TARP were very broad.