G.M.’s Push To Sell New Stock Could Cost Taxpayers $5 Billion
Last fall, right after the midterm elections, it looked like the Obama Administration’s decision to bail out General Motors wasn’t just necessary, but also profitable: The company’s first public offering made the American taxpayer a cool $13.5 billion, and the price of the newly available stock was supposed to rise to $40 or $50 per share from the opening price of $33.
But the stock is still hovering around $30 per share, and The Wall Street Journalis reporting that G.M. is pushing for an immediate sale of the government’s remaining 27% stake in the company. “Taxpayers would lose about $12 billion on the GM rescue, a bigger loss than the $7 billion they would face if shares rose to the $40 level that some analysts had expected,” wrote the Journal‘s Sharon Terlep.
The White House, however, is trying to hold off until August or September, hoping that G.M.’s next set of quarterly numbers will boost the stock. Ron Bloom, who runs manufacturing policy for the administration, is appearing before Congress to talk about the implications of the auto bailout and defend the current plan. “Treasury has a clear path to exit its remaining investment,” he is planning to say, according to prepared remarks published on the Oversight and Government Reform Committee official site.
His conclusion drives home the argument that the administration is not especially thrilled to own a car company, but will hold out until it can get taxpayers a good deal. “The government remains a reluctant shareholder and intends to dispose of its investment as soon as practicable, with the dual goals of achieving financial stability and maximizing returns to taxpayers,” he said.