The Obama administration said Wednesday it will sell 200 million shares or 40 percent of its remaining stake in General Motors Co. — back to the automaker and announced plans to completely exit the Detroit automaker by March 2014.
The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday. GM shares jumped sharply on the news and were up 7.5 percent to $27.36, or $1.90, early afternoon in very heavy trading.
The U.S. Treasury, after more than a year of refusing to say when it might start selling its remaining stake in GM, said it will announce a written plan in January to shed its remaining 300 million shares over the next 12 to 15 months, likely in a series of small stock sales.
……Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout – and the government would need to sell its remaining shares for about $70 each to break even. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion. But profits from the bank and AIG bailouts will largely offset the auto bailout losses.“The government should not be in the business of owning stakes in private companies for an indefinite period of time,” Assistant Treasury Secretary Tim Massad said in a statement who oversees the $700 billion Troubled Asset Relief Program. “Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests.”
The Treasury has also agreed to waive its ban on GM using corporate aircraft — a condition it imposed on a few companies that got large bailouts in 2008 and 2009 — but government pay restrictions on top executives remain in force.
Newsflash, Massad: The government has no fucking business whatsoever sticking its grubby paws into private companies in a free market system. But then, Obama has gotten away with all kinds of unConstitutional socialist crap since 2009.
That “exit strategy” also includes a 50% loss on the government’s breakeven price of $54 and a $40+ billion cost to all taxpayers.
In spite of the $50 billion in taxpayer-funded bailout and government takeover, GM went bankrupt in 2009, and is headed for bankruptcy again. Over 1000 dealerships were forced to close under the bailout stipulation.
GM lost about one-third of its value in under two years and continues to lose market share in auto sales. The Volt is a modern day Edsel; the company lost $600 million on the electric car.
So what happens when GM runs into trouble again?
- Auto Bailout Loss Could Exceed $70 Billion – Tea Party Nation (gds44.wordpress.com)
- Bailout on the Brink (freebeacon.com)
- Obama Finds What’s Good for GM Not So Good for Taxpayers (bloomberg.com)