Taxpayers To Lose $10B On Bailout As Gov’t To Sell Remaining GM Stock By End Of Year
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DETROIT (AP) — The U.S. government expects to sell the last of its stake in General Motors by the end of the year, bringing an end to a sad chapter in the 105-year-old company’s history.
The Treasury Department, in a statement issued Thursday, said it still owns 31.1 million shares of the auto giant, less than 2 percent. It plans to sell the shares by Dec. 31, as long as the price holds up.
Shares of GM briefly hit $39 in trading early Thursday. The shares pulled back a bit in morning trading, but still were up $1.04, or 2.8 percent, to $38.73. The shares have gained 34 percent this year.
The government received 912 million shares in exchange for a $49.5 billion bailout during the financial crisis in 2008 and 2009. So far it has recovered $38.4 billion of the money, but selling the remaining shares at Wednesday’s $37.69 closing price gets the government $1.17 billion, leaving taxpayers short by roughly $10 billion.
The government says the bailout was needed five years ago to save the American auto industry and more than a million jobs. It never expected to get all of the money back.
“Had we not acted to support the automotive industry, the cost to the country would have been substantial — in terms of lost jobs, lost tax revenue, reduced economic production and other consequences,” Deputy Assistant Treasury Secretary Tim Bowler said in the statement.
Taxpayers’ initially got a 61 percent stake in GM in exchange for the bailout, which was needed because GM nearly ran out of cash and may have faced liquidation. Treasury gradually has sold off its stake since a November 2010 initial public offering.
GM went through bankruptcy protection and was cleansed of most of its huge debt, while stockholders lost their investments. Since leaving bankruptcy in 2009, GM has been profitable for 15 straight quarters, racking up almost $20 billion in net income on strong new products and rising sales in North America and China.
GM said that work to transform the company continues. “We’re making great progress in our efforts to make the most of this second chance by building outstanding cars and trucks, creating jobs and reinvesting in our country.”
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