Tuesday, December 10, 2013

Taxpayers waste $10.5 billion on UAW/GM.

That's the final tally of the fed's effort to placate their union masters.

Posted at 10:33 AM ET, 12/10/2013

U.S. Sells Remaining GM Stock


Remember TV commercials in early 2010 where GM's then-CEO Ed Whitacre proclaimed the automaker had paid back its loans in full? Though technically accurate — the automaker repaid $8.1 billion in loans from the U.S. and Canadian government in April 2010 — the ads suggested taxpayers had no more involvement in Detroit's largest automaker. Critics argued that wasn't the case. When the Bush and Obama administrations orchestrated a $49.5-billion bailout of the ailing automaker in 2008 and 2009, part of the deal involved the U.S. Treasury taking a 61-percent ownership stake in The General. Taxpayers have held a stake until now.

The Treasury announced Monday that it sold its remaining shares in GM, whose U.S. brands include Buick, Cadillac, Chevrolet and GMC. But the automaker may want to hold off an ad blitz this time around. That's because the final chunk of a progressive sell-down means we can finally total the losses, and the bill for taxpayers is $10.5 billion.

This week marked the final chunk of the sell-down, which began in earnest when the government sold its stake down to 33 percent during GM's November 2010 IPO. In December 2012, GM purchased another chunk as the Treasury announced plans to sell its remaining stake — roughly 19 percent of the automaker at the time — by March 2014. It ran ahead of schedule; by September, taxpayers owned just 7.3 percent of GM.

Still, every stock sale meant booking more taxpayer losses. That's why the Treasury didn't sell any stock between the November 2010 IPO and after the 2012 presidential election, the Detroit News points out . After opening at around $35 a share in late 2010, GM stock languished for much of 2011 and 2012 in the $20 to $30 range — far less than the government would need to break even on its bailout investment. The automaker's stock broke $40 for the first time this month, and U.S. Treasury Secretary Jack Lew said Monday that the government sold off its final 2.2 percent stake in the automaker, according to the Detroit News.


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