US government may sell remaining GM shares by year end
23 Nov 2013
The US government said on Thursday it expected to sell remaining General Motors Co shares by the end of the year, which might saddle taxpayers with a total shortfall of about $10 billion on the automaker's 2009 bailout.
The treasury department's expected move that will see the government exit GM, underscored a remarkable recovery staged by the US auto industry since the nearly $50-billion taxpayer-funded rescue of the largest of the Detroit 3 automakers.
US auto sales through October had increased 8.4 per cent, with sales expected to top 15.5 million for the full year - well above the recessionary low of 10.4 million in 2009.
Reuters quoted an anonymous treasury official as saying the treasury's goal was never not to make a profit, it was to save the US auto industry.
According to commentators with that, Washington's move also called attention to how much the unprecedented bailout, implemented under the government's Troubled Asset Relief Program (TARP), had cost taxpayers.
The government had as of Thursday said it had completed the sale of 70.2 million shares of GM stock, and had till dated recouped $38.4 billion of the $49.5 billion investment.
The exit closes a chapter in the history of US government intervention in an industry that was on the brink of collapse in 2008, before bailouts from the administrations of George W Bush and Barack Obama.
The investment gave a lease of life to GM and Chrysler Group LLC, cutting debt and opening up growth prospects.
According to analysts, auto sales would be at their best year since 2007.
Meanwhile, in yet another sign of the recovery by the industry, Chrysler advisers are discussing a valuation of about $10 billion for the carmaker before an initial public offering that could happen next month, Bloomberg Businessweek said quoting sources.
The automaker, considered worthless in 2009, had been saved from liquidation due to President Obama's personal intervention.
GM was up 1.1 per cent to $38.12 at the close in New York, with the shares gaining 32 per cent this year, as the Standard & Poor's 500 Index advanced 26 per cent.
According to Michelle Krebs, an analyst at auto researcher Edmunds.com, the end of GM's pay restrictions might also mean the automaker had the flexibility to look outside the company for a replacement for chief executive officer Dan Akerson as he neared retirement having turned 65 last month.
