Will US take a steep loss on GM?

The U.S. Treasury owns 500 million shares of General Motors, and is tired of waiting for the share price to rise.

By Kim Peterson Apr 20, 2011 3:05PM
Image: Car Accident (© Hemera Technologies/AbleStock.com/Jupiterimages/Jupiterimages)How long do you hold on to a so-so stock? That's what the U.S. government is wondering about its massive stake in General Motors (GM).

The U.S. Treasury still owns about 500 million shares after the $50 billion rescue of the company in 2009. It would need to sell those shares at $53 apiece just to break even on its investment.

But GM's share price is nowhere near that amount. The stock hit a new low this week and is at about $30 today, down 19% year-to-date. The way fuel prices are moving, the chance of that stock hitting the $53 mark anytime soon are nil.

The government is likely just going to sell the stock at a loss to taxpayers, The Wall Street Journal reports. At GM's current price, taxpayers would lose at least $11 billion if the government sold its entire stake. But hey, what's another $11 billion to a government bleeding so much red it could pass for an extra on "Saw 3D"?

The Journal says that the Obama administration wants to sever its last ties to GM before the stock sale turns into an exclamation mark in next year's presidential election. And GM, for its part, would love to say goodbye to the government because then all restrictions on executive pay would lift.

GM raised $23.1 billion in its initial public offering last November, and the government was able to cut its stake to 26.5% from 61%. But the IPO terms say the Treasury can't sell any more stock until May 22, the Journal reports.

People thought the stock would be just fine this year. But that was before gas prices started climbing and the earthquake in Japan disrupted supplies across the industry. And GM's chief financial officer bailed unexpectedly.

Treasury Secretary Timothy Geithner hasn't made the final decision whether to sell the shares, the Journal reports.

Tags: gm
31Comments
Apr 20, 2011 3:47PM
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Make GM buy the stock at what Gov paid for it.  Plus 5%.  Let GM take the loss. 

Better yet, let the union take the loss.    WHY should taxpayer have to take the

loss?

Apr 20, 2011 4:44PM
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Just another example this administration knows nothing about business, money or investments.  It is this kind of reasoning that has us heading down the road to bankruptcy.  While the rest of the world buys low and sells high...this administration, which as we all know refuses to listen to people in the know, goes against rational wisdom and buys hugh and sells low.  Ironic that prostitution is a crime but yet it's perfectly Ok for this administration to screw us and then hand us a bill. 
Apr 20, 2011 4:11PM
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Why sell the stock now? By telling everyone you are going to dump 500 million shares on the market you are driving the price of your own stock down. Hang on to it and sell it for a profit next year. Or maybe they are just saying they are going to sell to drive the price down and all their friends and family are buying GM on the cheap.
Apr 20, 2011 5:11PM
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Still 50 Billion to me, never should have taken tax payer dollars for bail out
Apr 20, 2011 6:10PM
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HUBEE HIT IT RIGHT LET GM BUY BACK THE STOCK AT 10% OVER OUR COST LET GM STOP THE BONUSES AND GOLDEN PARACHUTES AND EAT THE LOSS LET THEM SINK OR SWIM ON THEIR OWN MERITS
Apr 20, 2011 5:09PM
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I think we should keep the stock.  Eventually GM will rise or finish collapsing.  If it does collapse, the taxpayer gets first dibs on the wreckage and the bondholders can take the loss.
Apr 20, 2011 5:55PM
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As a part of the real working class here in America I must say that this just makes me sick. Poor management from GM and we get stuck with the bill.
Apr 20, 2011 3:56PM
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Hey Obama, let me sell you some OCEAN FRONT property in Arizona.
Apr 20, 2011 5:41PM
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I think they should have just let all the banks and big company's go broke. Then people would of got a taste of what my parents went thru in the 1930,S If you think we have a mess now you have no idea what it would be like if all these would have failed. For one unemployment over 25%. Another less money coming in from taxes. All social programs shut down. We would of been back to soup lines. The thing we need to do is make sure that this never happens again. It won't be the tea party, republicans, or democrats that cure this. It will take a new kind of government to gain control of the mess that has been made of our economy. It will take people with the brains to buy there own products and not just pick up anything that comes along. Buy american and we will heal ourselves.
Apr 20, 2011 6:16PM
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GM is being kept afloat with incentives to make alternative cars that nobody wants to drive.  It is just a matter of time before they lose their profitability, too.  Ultimately we will need to let go of "too big to fail" policies.   There is plenty of competition out there to keep the auto, housing, and banking industries afloat without causing another crash.   We will never recover until we allow the markets to correct themselves.
Apr 20, 2011 4:29PM
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hey hubee, get used to it, the taxpayer(consumer) always pays for it... its unfortunate but true
Apr 20, 2011 4:33PM
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i don't know about the rest of you taxpayers here,but i never wanted gm stock in the first place.now we got to take more of a loss,last i read they were still handing out some pretty good paychecks to them folks in gm management.funny,my neighbor just went to the food bank.they were out of food,i guess it's ok his 3 kids well go without,wouldn't want a billioner to give up a tax break.
Apr 20, 2011 4:00PM
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Maybe they should start by selling product instead of selling price.  Jan. and Feb. were huge months for GM because all of the business was pulled ahead from MArch and April. 

 

GM residual values are headed down the same road as before.  just keep building cars and slamming the dealers.  Good rebates ahead = bad resale value. 

Apr 20, 2011 7:03PM
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This is exactly why we do not have a real president.  This guy is the biggest joke since Jimmy Carter.  Everything he touches turns to ****..

 

It is amazing that anyone with a half a brain could support this idiot.

 

Apr 20, 2011 5:56PM
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I drive a Toyota now.  GM will eventually tank again, its still a huge behemoth organization that is also controlled by the Union & government.  Just like the ignorants in Washington who never knew how to run a business anyway, to lose money on a stock sale such as this, should be of no surprise.  Also, this crap of employee discounts continuing, this is an afront to taxpayers.  If anyone should get a discount it is the taxpayer.  I went into a GM dealership and tryed to strike a deal, got down to the end of the deal and asked about incentives.  Well I couldn't get the employee discount since I didn't work for GM, I told the saleman and sales manager if as a taxpayer I couldn't get the employee price forget it.  I turned and walked away.  More people should do the same, tell GM to shove it. 
Apr 20, 2011 7:56PM
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"The Journal says that the Obama administration wants to sever its last ties to GM before the stock sale turns into an exclamation mark in next year's presidential election"

    I know there's got to be a legal term for this but if this isn't one of the most scandalous actions a government has ever taken against it's own people I don't know what is. To make a statement like this is outrageous and a direct insult to the people of the United States by it's own President for the sake of trying to buy votes off of --Oh , by that time the people will forget we screwed them out of all their money to play our own Union bailout games. It's time this crap ended and the people responsible held accountable for their actions.
    WAKE UP AMERICA, How blatant can you get.
Apr 20, 2011 8:29PM
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the real sadness is that our El Presidente would like to unload GM so it isn't a key negative  point in next years election. Isn't that great!

 Now if the man just said "i did what i thought was right, i tried, i saved an untold number of jobs, but it just isn't working". Now i could support that man, i could understand .

 Did we take the high road, noooooooooo we make excuses and try to get out while the getting is good all in the name of next years elections. I don't respect anything in that at all.

 On the otherside GM would like to be rid of the Government so they can get rid of the restrictions on executive pay. Excuse me while i puke! But i can't say i'm surprised about GM they are one of our "prize" industries.

 I had truly hoped we found someone with character to be our president but once again i am apparently mistaken. In politics it is all about votes in iindustry it is money. Where do they differ? They don't !!

 Now isn't this a proud moment for America :(

I'm moving to Ecuador folks  and won't miss this mess we call a country for a moment!

Apr 20, 2011 8:13PM
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Obama scr#wing the American Tax payer & trying to dump evidence before it's time to count votes? No Way! You mean a con artist is still a con artist? Imagine that!? I'm sure if he creates a big enough welfare pool, he'll get his votes.

 

 Oh & look up the term he is using recently in his speeches: Last few weeks Obama has been saying-social compact in his speeches-I urge you to research you-This was used by Thomas Hobbs at the time of our foundering fathers who would not accept it. In short SOCIAL COMPACT MEANS
People live under a KING and shall have no rights except that which the KING appoints. Rome gave it a short (did not work) many 3rd world nations use it today (how is that working out)
Do you want Social Compact so the goverment can rule your life even more or do you want freedom??
CAN YOU AFFORD FOUR MORE YEARS?   

Apr 20, 2011 9:05PM
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 Hang on to it and sell it for a profit next year
What makes you think GM stock will rise over the next year?  Well at least the next time GM fails, our  gov't should have the sense to look away and let it fold.  The Chinese could've come in during a non-Obamanation controlled BK and taken over this business.  And just how long do you think they'd tolerate the UAW nonsense?
Apr 21, 2011 7:55AM
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Most of us knew at the time of the GM bailout that the taxpayer would get screwed. Obama wants this stock dumped to keep it in the background for his re-election campaign. He made a deal with the unions and it is now biting him in the @ss because GM has certainly not changed the way they do anything....the unions still have control of production costs. The $40K Chevy volt they are touting is not the way to save America because the middle class cannot afford it. The money to bailout GM was like most of the bailouts.....supporting special interests in this country and not the entire nation as a whole. The People who have quit buying GM are not going back to that brand and part of that has to do with the way the bond holders were left holding the bag.

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