GM Bailout Shortfall

[MorGrendel]

The plan the U.S. announced today to sell its remaining 500 million shares of General Motors virtually guarantees a substantial taxpayer loss on the $49.5 billion bailout.

The Treasury Department today said that it will sell all its stock in GM within 12 to 15 months and sell 40% of its stake within weeks, starting with a $5.5 billion deal for GM to buy back 200 million of its shares as soon as next month at $27.50 per share.

The government would have needed about $53 per share for its 26% stake to break even on the bailout. The deal negotiated with GM for the 200 million shares will cut the U.S. stake to 19% but raise the price needed to break even on the remaining 300 million government shares to nearly $70
....

http://www.usatoday.com/story/money/bus ... k/1779191/

[Berserker]

What's your point?

[MorGrendel]

Mostly informational. I had thought the bail outs had already been paid out, but that must have only been Chrysler. However, it is unfortunate the bail out difference will be passed on to the taxpayer.

[Berserker]

Bailouts were more then just the auto industry. In some cases, there were huge profits made (e.g.sale of AIG shares made 22.7 billion profit for the taxpayer).

In this case, it looks like there could be a loss. I say could because the gov't will only sell 40% now and won't sell the remaining shares for another 12-14 months so who knows how the maket will be in a year? If it's up, we might make a profit on GM. Time will tell.

Besides, the GOP has been putting huge pressure on the treasury to sell this stock for months. If it was up to the GOP, the treasury would have sold the stock long ago with bigger losses. It's rather unfair to critisize the treasury for taking a loss in this case in my opinion.

In my opinion, they should have kept the stock until the price made them a profit (like in AIG's case). They should not have caved in to political pressure.