The TARP Is Lifting: Government Motors No More, In About A Year Or So

Bertel Schmitt
by Bertel Schmitt

It has been repeatedly suggested that GM should use its ample profits to buy back the shares held by the U.S. government (don’t forget the Canadians.). Finally, GM listens to reasons. Or, possibly, strong suggestions from Washington. GM will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion, or $27.50 per share, the company said in a statement The share buyback is part of the Treasury’s plan, also announced today, to fully exit its entire holdings of GM stock within 12 to 15 months, subject to market conditions.

Stock buyback plans usually lift the price of the share. Promptly, GM shares were up some 8 percent to 27.57 at the open.

After the buyback, Treasury will still own a stake of about 19 percent, down from about 26 percent currently. Treasury said it will sell its remaining stake of about 300.1 million shares “through various means in an orderly fashion” over the next 12 months to 15 months, and could begin the process as soon as January. That could bring the price down again.

According to Reuters, Treasury has agreed to relinquish certain governance rights, including required levels of U.S. manufacturing and barring the purchase of corporate jets. Senior executive payment caps under TARP remain in place. Once Uncle Sam is completely out of the picture, it will be bonus time at RenCen.

The Canadians remained unmentioned in the declarations of impending independence. Canadian Finance Minister Jim Flaherty told Reuters that his government has no immediate plans to sell its stake in General Motors. Not now, maybe later. Oh well, maybe Government Motors a little longer.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments
Join the conversation
4 of 45 comments
  • Type57SC Type57SC on Dec 19, 2012

    The image of a plodding GM and pushing UST is at odds with recent history. I recall GM executives pushing a buyback earlier in the year and the Treasury saying no. So why do you say "GM listens to reasons. Or, possibly, strong suggestions from Washington."? or did you mean to say "Washington listens to reasons. Or, possibly, strong suggestions from GM.?

  • Vcficus Vcficus on Dec 19, 2012

    I love how attached we get to our tax dollars... I'm personally happy the Feds (both aisles, before and after Nov 2008) threw some cash at these companies when I don't believe they would have found any anywhere else... jobs, etc. Including mine :-) But if you're really annoyed at the $20 billion or so automotive may have sucked up and you believe the banks 'paid off their loans' then why is Freddie and Fannie getting $150 billion to keep them afloat? All these Government Sponsered Enterprises did was keep the bad loans insured after the banks made them... the banks got to walk after their TARP and we get to pay for the guarantees. Oh, and it looks like while no one was looking that the FHA may have guaranteed a few billion more we'll have to cough up here in 2013. So cars or houses... pick your expensive support structure and keep throwing money at it!

  • El scotto El scotto on Dec 19, 2012

    Five Billion? I'd rather buy a cool nuclear powered aircraft carrier than some outstanding share of GM.

  • Mike Kelley Mike Kelley on Dec 20, 2012

    Of course this will be spun as some sort of "victory" for Obama and the crony socialists. It is not: http://nlpc.org/stories/2012/12/20/gm-buyback-treasury%E2%80%99s-shares-no-panacea

Next