U.S. Treasury To Sell Remaining GM Stock
DETROIT (WWJ/AP) - The U.S. Treasury Department announced Friday it will begin selling its remaining shares of General Motors common stock.
The government still holds 300 million shares of GM common stock, giving it 19 percent of the auto giant.
WWJ Auto Insider John McElroy says this is great news for GM.
"It has, since the very beginning, wanted to get this 'government motors' monkey off its back. With the treasury wanting to sell the rest of its GM stock it is now going to be able to do that," said McElroy.
The sale will bring an end to almost four years of partial government ownership of the car maker.
So, why sell now?
Last month, the treasury sold 200 million shares of GM for $27.50 a piece. McElroy said the stock is now valued a bit higher -- at just over $29 a share.
"The treasury wanted to get out of this, too. It does not reflect well on the Obama administration that it still is holding onto GM stock three years after the bankruptcy," said McElroy. "It's not the ideal time; the treasury would still love to get more money back than it's going to right now, but at some point you just have to decide it's time to act."
When the stock is finally sold, it will end a sad chapter in GM's history. The company nearly ran out of cash in 2008 and needed government money to survive a trip through bankruptcy reorganization. Since then, GM has posted 11 straight quarters of profits, piling up $16 billion in net income. Last month, the company bought 200 million of its shares from the government for $5.5 billion.
The bailout has rankled many taxpayers who thought the government shouldn't have interfered with the company's business. Some still call GM "Government Motors."
President Obama, who was responsible for engineering much of the bailout, touted his role in the 2012 presidential election, saying it saved 1 million jobs and prevented the collapse of America's auto industry. GM has said that once the shares are sold, it expects its sales to increase. Some people have refused to buy GM cars and trucks as long as the government owns a stake.
The government is still $21.5 billion in the hole on the GM bailout. Breaking even would require selling the remaining 300 million shares for an average of about $70 each — more than double the current trading price.
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