The U.S. Treasury Department plans to sell its remaining 31.1 million General Motors shares by the end of the year, according to a statement issued by the government branch. The move would bring to an end to the Treasury’s role in shaping the auto giant’s restructuring following bankruptcy proceedings in 2009.
The 31.1 million shares represent about 2 percent of GM’s total stock — a significant decrease from the 912 million shares the government received in exchange for $49.5 billion in cash in the wake of the 2008 financial collapse. Shares of GM stock closed yesterday at $38.45, a 34 percent increase on the year.
To date, the U.S. Treasury Department has recovered $38.4 billion from previous sales of GM stock and the final offering promises to recoup an expected $1.17 billion, leaving the department about $10 billion short compared on its initial investment. However, the government would argue that investing in The General saved millions of jobs and that it never expected to recoup its entire investment. That said, the total sum of Uncle Sam’s $421 billion bailout spree, including TARP and rescuing the financial sector, has reportedly returned a $10 billion profit.
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While the stigma of GM “leeching” off the taxpayers funds will never be put to rest, it’s certainly refreshing to see the government’s role eradicated!!!
Despite coming up $10B short on money lent to GM, the Treasury is going to make money on the TARP relief. According to the WSJ the Treas. will make an additional $10,000,000,000, or 2% ‘profit’ on the money dished out 5 years ago.
Actually, the taxpayers will make money. According to this article: http://www.freep.com/article/20131122/BUSINESS0101/311220130/GM-General-Motors-Treasury-Department-government-stock the government received 30 billion in taxes in 2009 and 2010. That revenue was not only depreciation on the initial investment.
I am very thankful that GM was saved. I was scared I was going to have to drive used cars for the rest of my life. I have bought several brands, but only the GM vehicles I have owned lasted. And I won’t buy foreign again.
@ Joe G
That’s trying to sugar coat it a little/lot. The tax payers didn’t make money, the Fed would have just not gotten that money. If all you look at is the final sum, sure it looks like money was made, but the Treasury is still taking a 10-billion-dollar hit on the loan. If stock prices were at $54 and GM came out even on the loan (or whatever the final price would have to be) the ‘tax payers’ would still have that $30B revenue from taxes.
It’s that “but” that no one cares about.
Joe I can’t tell you how much I back up your statement, the idea of driving a Ford or even a European or Asian crap blows my mind!
I’m so glad GM made it through it’s tough times!
Now GM can get a lot more breathing room in terms of product role out, and company restructuring. People say that right now GM is in a roll, but I think that the best is yet to come once the treasury gets rid of those shares.
GM will finally have the “Government Motors” scheme off of them, well for the most part! Good point that saving the American Auto Industry saved many jobs and that the missing $10 Billion has basically been made up! I just hope GM has some secrets and tricks up their sleeves (Specifically Pontiac and new/redesigned models on their current lineup!)
This idea that it was a loan dollar for dollar is just misguided, the feds gave GM money for stock swap. In doing this they except the responsibility if those shares do not hit a certain amount to cover the amount given in real dollars!
The loan that was given to GM that GM already paid back was dollar for dollar!
Now do you see the difference?
It is not GM’S responsibility to cover the risk the feds took when they offered a money for stock swap!
This sort of thing happens all the time in business, a executive will have a choice take a money pay out for a bonus or elect to take the amount in Stock options. If he takes the stock options he is then taking all the risk of the stock falling and his bonus will reflect that amount!
People GM made a deal with the feds and GM took care of their end of it now it’s time for the feds to finish their end of it!