Government Sells Remaining Stake In GM
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DETROIT (WWJ/AP) – The U.S. government ended up losing $10.5 billion on its bailout of General Motors, but still says the alternative would have been much worse.
Treasury Secretary Jacob Lew announced Tuesday that the government sold its remaining shares in the Detroit automaker.
The government received 912 million GM shares, or a 60.8 percent stake, in exchange for a $49.5 billion bailout during the financial crisis in 2008 and 2009. It recovered $39 billion of the money, meaning taxpayers came up more than $10 billion short.
But Lew says the rescue was necessary to save 1 million jobs and stop the American auto industry from collapsing.
GM has said repeatedly that some potential customers have stayed away from its brands because they object to the government intervening in a private company’s finances. Because of the bailout, the company has been given the derisive nickname “Government Motors.”
“The U.S. Treasury’s ownership exit closes just one chapter in GM’s ongoing turnaround story,” said General Motors Chairman and CEO Dan Akerson, in a statement. “We will always be grateful for the second chance extended to us and we are doing our best to make the most of it. Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again.”
“Continued investments, innovation, and job creation are just some of the “returns” of a healthy GM and domestic auto industry. Our work continues uninterrupted, and we will keep our sights squarely on our customers and transforming the way we do business,” Akerson said.
Said WWJ Auto Beat Reporter Jeff Gilbert, “General Motors is obviously glad to get this part of its history behind it … I talked to GM North America President Mark Reuss earlier today. He said this is a huge boost for the entire General Motors family.”
Gilberts said Wall Street obviously agreed, because GM shares rose 1.2 percent in after-hours trading following the announcement. They rose 1.8 percent in regular trading, at one point reaching $41.17, the highest level since GM returned to the markets with a November 2010 initial public offering.
GM went through bankruptcy protection in 2009 and was cleansed of most of its huge debt, while stockholders lost their investments. Since leaving bankruptcy, GM has been profitable for 15 straight quarters, racking up almost $20 billion in net income on strong new products and rising sales in North America and China. It also has invested $8.8 billion in U.S. facilities and has added about 3,000 workers, bringing U.S. employment to 80,000.
Reuss said the government exit would boost sales, especially among pickup truck buyers.
(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)