'Government Motors' no more?
The U.S. Treasury Department and General Motors announced today that company will buy 200 million of the U.S. government's 500.1 million shares in GM.
GM will pay $27.50 for each share. That's 7.9 percent more than yesterday's closing price of GM stock.
The sale, expected to be completed by the end of the year, will reduce the government's stake in the company to around 19 percent.
In a statement, the Treasury Department said this is part of their effort to wind down the rescue money invested in the Troubled Asset Relief Program, or TARP:
"... TARP was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time," said Assistant Secretary for Financial Stability Timothy G. Massad.
The U.S. Treasury Department expects to sell its remaining 300.1 million shares in the next 12-15 months.
The government invested a total of $49.5 billion into GM.
Including today's announced sale, the Treasury Dept. says it has recovered more than $28.7 billion of that investment.
Michigan Radio's Tracy Samilton is following this story. She notes that if the government sells its remaining shares at $30 per share, it would recoup around $9 billion more.
That would put the total loss of taxpayer investment in the GM rescue at around $11.8 billion.
A loss the Obama Administration would likely argue was worth it. Again, from the Treasury Department's statement:
According to independent estimates, the rescue of the American auto industry helped save more than 1 million jobs. Moreover, since June 2009, the auto industry has added a quarter of a million new jobs.
In a statement, GM CEO and chairman Dan Akerson indicated the company is anxious to rid itself of the 'government motors' label.
“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” said Dan Akerson, chairman and CEO of GM....
“We come to work every day grateful that taxpayers from the US and Canada stepped forward to rescue our industry, and determined to show this extraordinary help was worth it,” Akerson said.
If you want to dig into the numbers, you can check out the lifetime costs of the TARP program in the Treasury's monthly report to Congress.