U.S. sells GM shares, plans to exit ownership within 15 months
Now down to a 19 percent stake, the government says it will sell the remaining shares by 2014.
The Treasury, which pumped $49.5 billion into GM during the automaker's bankruptcy proceedings in 2009, once owned 61 percent of the company.
Its current 26.5 percent stake has been cut to 19 percent as of today, and the remaining 300 million shares will be sold back to GM within 12 to 15 months, the Treasury said.
GM had wanted to buy back the 200 million shares in September, but the Treasury balked, citing a lower $24.14 share price. Many industry watchers saw the move as an attempt to protect President Barack Obama's re-election campaign, which would have had to explain billions in bailout losses just weeks before the Nov. 4 election. The share price in today's transaction was $27.50, below the $33 initial public offering price in November 2010 and about half the estimated $53 price the Treasury needed to break even on its purchase.
The government has conceded that it will never recover the full $49.5 billion from GM. With the sale of remaining shares at current prices, the government could stand to lose more than $12 billion. It has already lost $1.3 billion from the Chrysler bailout, despite the automaker's early full loan repayments.
With today's sale, the Treasury agreed to waive certain restrictions on GM, such as the purchase of private jets and specific levels of U.S.-based manufacturing. The caps on executive pay remain.
The government still owns 74 percent of Ally, GM's consumer lending arm -- formerly known as GMAC -- but has recovered about $5.9 billion.
[Source: GM, Treasury]
Do I get reimbursed my share of the bail out cost?
(Seriously doubt it... jacka** politicians)
Fact is, if GM had gone under, Ford, Chrysler, Toyota, Nissan, Honda and Subaru would have had to pick up production to meet demand. To do that they would have to hire a few hundred thousand people thus...GM going under would have meant nothing to our economy.
Our government bought high, sold low, didn't get paid back fully. Their stupid decision making is the reason that we are in this mess to begin with.
If Obama had half a brain he would have loaned the money to GM with stipulations that they stop outsourcing jobs to foreign countries and bring back the tens of thousand of jobs that they put in place in Mexico. He could have ordered them to restructure their management and adjust the salaries of the grossly overpaid union workers which would allow the company to right their ship.
Instead he loaned blindly and what did GM do with the money? They ran to China with it to hire their people to build GM's.
If GM was on fire, I wouldn't piss on them.
Worse, there is nothing in the pipeline that would excite me to buy a GM product. They may be there but until the cars and trucks are in showroom floor, consumer perception will not change. With this news that GM is costing American taxpayers bail-out moneys, many consumers will still negative attitude toward the brands.
Worst of all, management at GM want to get rid of the US taxpayer holdings so it is free of the compensation restrictions. Once the corporate management get rid of those, their compensation packages will go up. Bonuses will be padded. Resentment in the rank and file will rise. Eventually, product quality will suffer. Sales will sag. More money is needed. GM will want to sell bonds, but investors will have remember the days they were fleeced. Ultimately, GM will be back in the same hole and may need another bail out.
Will we the taxpayers be there in 2020?
There are a couple of key facts missing from this blog post. First off, the amount of money America lost during the bankruptcy period is staggering yes but what's also staggering is the amount of money GM and Chrysler were allowed to "write off" when the companies filed bankruptcy shortly after being "bailed out".
Secondly, the majority of Americans were against the bailout to begin with.
If the companies would have made competitive products to begin with, we wouldn't have had to bail them out or lose the additional assets from the bankruptcies.
What we're left with is taxpayer debt, hit/miss vehicles and a stock price that's half of its current worth.
In any business model, that's considered a failure and the CEO/Management team would have been fired....without pensions.
And another point some don't think about is. Other countries give their auto industries favored tax breaks/loop holes, laws ect. This is an unfair advantage when talking about "FAIR" trade.
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