By on September 19, 2013

GM-building-US-Flag

The United States Treasury has reduced its stake in General Motors to 7.3% after selling off  another block of the shares it acquired during the bailout of the giant automaker. According to documents released earlier this week cited by Reuters, the Treasury sold at least 110 million shares between May 6 and September 13, raising more than $3.82 billion.

The U.S. government’s stake in GM is now down to 101 million shares, which means that more of GM is currently owned by the provincial Ontario and federal Canadian governments, 110 million shares, than by the U.S. Treasury. The U.S. government’s share in GM was originally almost 61%. Treasury put $49.5 billion into General Motors during the bailout and the agency says that it has recovered $35.4 billion so far.

“We remain on track to complete our exit from GM by early next year at a cost far less than originally projected,” Treasury Assistant Secretary Timothy Massad said in a statement. GM shares closed Tuesday at $36.71, making those 101 million remaining shares worth about $3.7 billion. If current stock prices hold, once divested, Treasury will likely lose about $10 billion on the bailout of GM.

Some analysts have predicted that once that full divestment is completed, GM may again start paying dividends on common shares, which it hasn’t done since the second quarter of 2008. GM executives have declined to comment on possible dividends, saying that the automaker’s current focus is on reinvesting in company operations.

 

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39 Comments on “U.S. Treasury Sells 110 Million Shares of GM Stock, Reducing Stake to 7.3%...”


  • avatar
    Aquineas

    Let me guess, the latest sale block happened around 10:25am today?

    https://www.google.com/search?q=stock+price+gm&oq=stock+price+gm&aqs=chrome..69i57j0l3.1936j0&sourceid=chrome&ie=UTF-8

  • avatar
    xtoyota

    How much money did the taxpayers lose on this deal????

    • 0 avatar
      aristurtle

      Says right there in the article; about one-twentieth of the Iraq war.

      Less than they would have lost had GM gone Chapter 7, easily.

      • 0 avatar
        darkwing

        Or about half a Solyndra. Still, more than they would have lost had GM been allowed to just fail gracefully.

        • 0 avatar
          mike978

          At that particular time it wouldn`t have been graceful with all the other economic and financial issues.
          Also has anyone calculated the cost (in lost income tax receipts and extra welfare payments) the collapse of a major corporation would have been. The difference isn`t the $10B vs zero but $10B vs a cost greater than zero.

          • 0 avatar
            darkwing

            For the umpteenth time, bankruptcy is not the same thing as collapse, no matter how much scaremongering politicians and crony capitalists may say it is.

            Isn’t it funny how “too big to fail” is a bad thing, but “too blue to fail” apparently isn’t?

          • 0 avatar
            probert

            @darkwing – you can repeat things umpteen times but uou’re still wrong. In the middle of a depression no private bank was going to step in to help GM. It would have been a total collpsa with jackels like Bain licking the bones of the remains.

            10s of thousands of jobs were saved etc etc.

            Also when you mention Solyndra retard meters swing far right. The government’s investments in futur energy solutions has been very successful and created jobs, wealth and domestic technical knowhow. This will be better for national security than any amount of bombs and the deaths of other peoples’ children.

            Solyndra wasn’t a scandal – it was a failed investment in a volatile industry.

            If you want to do some probing – which you don’t – find out what Ford has done with their $6,000,000,000 in alternative energy grants. Mullhany (?) is paid over $20,000,000/year so a nice percentage has gone to his underwear collection.

            Their “eco” cars must have cost $9.95 to develop and do more to dissuade people than anything else.

            Do some thinking — 10 minutes of research – and you don’t have to repeat the same tired tropes umteen and 1 times.

          • 0 avatar
            darkwing

            All that nonsensical ranting, and you still can’t be bothered to understand what bankruptcy actually is. More’s the pity, I guess.

          • 0 avatar
            Pch101

            “you still can’t be bothered to understand what bankruptcy actually is.”

            That’s ironic.

            Reorganizations require money, i.e. a DIP lender.

            Name who that lender was going to be, and what criteria that lender would have used to justify the amount of money required for the reorg plan. Don’t be shy — provide the details, because I have seen no indication whatsoever of anyone that was willing and able to act as a DIP lender to either GM or Chrysler circa 2009.

            Name names. Be specific. Avoid rhetoric — just provide details and dollar amounts as to who was going to do what.

        • 0 avatar
          aristurtle

          Solyndra’s loan guarantees were $0.5 billion, not twenty billion. [http://www.factcheck.org/2011/10/obamas-solyndra-problem/]

          GM entering liquidation would not have been graceful, and there was no non-governmental actor capable of stepping in at the time to prevent this.

          • 0 avatar
            darkwing

            My mistake — so about 10 Solyndras, then.

            Why do you assume GM would have been liquidated? Will the umpteenth+1 repetition make any difference? (I just saw an American Airlines jet pass over my head, by the way. Very much non-liquidated, I would say.)

          • 0 avatar
            aristurtle

            Repetitions bore me. I prefer citations. Steve Rattner, the guy who organized the restructuring, said that they could not find alternate backers for the effort. [http://opinionator.blogs.nytimes.com/2012/12/19/the-liberation-of-general-motors/] If you have evidence that there was some firm willing to lend GM eighty-five billion dollars in mid-2009, please, name them, and provide evidence that they were capable and willing. If you have nothing but your own assertions, repeating yourself umpteen times is unnecessary.

            The credit markets were rather different in 2011, when AA filed Chapter 11, than they were in 2009, when GM did. There was this whole global financial meltdown thing less than a year prior, it was kind of a big deal.

          • 0 avatar
            darkwing

            Really? You could have fooled me. You seem happy — eager, even — to repeat your own assumptions rather than to challenge them.

            You suggest a false dichotomy. (And your use of the term “loan” is misleading — debtor-in-possession financing is hardly a typical “loan”, and the government’s commandeering of the bankruptcy process went well beyond that.) Why, for instance, couldn’t the government simply have backed GM’s short-term bond issues through the bankruptcy process, but otherwise remained hands-off?

            Your stilted and uncreative understanding of the situation is beginning to bore me.

          • 0 avatar
            Pch101

            “If you have evidence that there was some firm willing to lend GM eighty-five billion dollars in mid-2009, please, name them, and provide evidence that they were capable and willing.”

            That’s a fair question. Just don’t expect anyone to provide you with a substantive, factually-based response.

            And here’s a hint to those who believe that there some private sector solution: The fact that the government took so much stock, in lieu of making loans, is a very strong hint that there was no private sector DIP funding.

            The reorganized GM didn’t have enough cash flow to support that much new debt. Had the new GM had borrowed that much money, it would have collapsed under the weight of the obligation. Anyone who understands finance should be able to figure this out (which would explain one reason why there was nobody in the world of finance who was willing to do it.)

          • 0 avatar
            OnlineAlias

            What was the difference? The government was backing GM, either way. There was also the collateral damage that all of the suppliers would have gone down, and therefore so would have Ford and Chrysler.

            No one can say it would have been better or worse if the government hadn’t done what they did, because it is never going to play out the other way. What happened is what happened, and it wasn’t so bad. Get over it.

          • 0 avatar
            darkwing

            You types sure are addicted to spending other people’s money. Why else would you react so badly to the suggestion of cutting you off?

        • 0 avatar
          CarPerson

          No. Far less than if GM “failed gracefully”, an oxymoron if there ever was one.

  • avatar
    Lorenzo

    They might not have “lost” anything. When Congress decided to stick the rich by increasing taxes on yachts, they ended up getting more money from the tax itself, but overall they lost tax revenue since the rich stopped buying yachts and shipyard employees, well-paid artisans in teak and brass, got laid off. The loss of their income taxes and the shipyard business taxes was far more than the increase in the yacht excise tax.

    By the same token, “saving” GM and Chrysler also saved jobs and the income taxes of direct employees, their suppliers and the primary materials suppliers (steel, rubber and glass). In effect, the bailout spent $10 billion to prevent a loss in tax receipts many times that, at a time when the banking system was in danger of imploding.

    There’s no end of arguments from the strict bookkeeping set that a loss is a loss, all other things being equal, but all other things are NEVER equal, and you can’t isolate a singular action from its own ripple effects.

    • 0 avatar
      darkwing

      You incorrectly assume that denying GM and Chrysler the loans would have led to a shutdown. But even if that were true, Ford, Toyota, Honda, Hyundai, Kia, etc. were still alive and kicking, yes? Why wouldn’t they put that suddenly excess capacity back to productive use?

      • 0 avatar
        mike978

        You are probably right that some other companies would have stepped in to make up for the lost production. However it takes time to take over and refit a factory. Also at that time the car market was heading down to a SAAR of 10 million units,. Not exactly a time the industry would want to invest for extra production. We will never know because the actions were taken and it is now in the past.

      • 0 avatar
        ihatetrees

        Exactly.

        There was plenty of excess capacity in North America had GM been properly liquidated and dismembered. Ford would have been stronger for sure, especially with F150 sales. And who knows? A proper liquidation may have had Toyota buying up the Silverado and Corvette names and making a go of it…

        Of course, liquidating and dismembering GM would have mostly benefited the wrong type of auto maker; transplant firms in right-to-work states and imports.

        • 0 avatar
          Lorenzo

          You missed my point: GM and Chrysler going down would have cost tens of thousands of direct and supplier jobs, just when the economy was taking a dive, and there were no banks financially healthy enough to serve as debtor in possession for a proper bankruptcy. That’s why the government stepped in.

          • 0 avatar
            ihatetrees

            I did not miss your points; I just don’t consider them relevant because you don’t consider alternatives.

            My guess is that your ‘proper bankruptcy’ does not include liquidation.

            And regarding your so-call ‘cost’ in GM and Chrysler jobs; these would have been replaced by other (transplant) jobs (and by ‘benefits’ of lower liquidation-led product prices).

            Netflix and Hulu replaced Blockbuster. Toyondissan replaces GM / Chryser. Society benefits accordingly…

            If the the G hadn’t stepped in with a heavy hand, important suppliers would have easily been saved by Toyondissan (combined market cap $80+ billion DURING the crisis). Do you really think Toyota or Honda management would have let key suppliers shut lines down? Or that banks are the only way to finance?

            Now, you may consider these options offensive to ‘fairness’ or some sort of Merry Poppins-style sense of ‘Economic Justice’.
            But these options were quite plausible until the heavy hand of government crowded them out.

          • 0 avatar
            Pch101

            General Motors wasn’t bailed out because it made cars.

            Like AIG, GM had the potential of becoming the next Lehman. The car aspect of its business was barely relevant.

            Had the US government failed to intervene, the global capital markets would have assumed (rightly) that the US government was asleep at the wheel and that there was no one on earth that could prevent a depression.

            The markets were looking to the US for leadership, because the US is the largest economy in the world with the reserve currency, and a failure of GM would have almost certainly thrown the CDS market into a collapse, which would have destroyed the banking system. It would have also torpedoed the PBGC, which would have forced the feds to bail that out, too.

            Had the US economy tanked, everyone would have been in deep s**t, including the transplant automakers (and for that matter, most of the people on the internet who are complaining about it.) You’d have to be awfully naive to think that Toyota would fare well in a US with 25% unemployment and collapsing GDP.

            The cost of bailing out GM was a mere fraction of the economic activity that would have been lost had it not been rescued. There are times when grown ups have to step up, hold their noses, and do things that are necessary, even if they aren’t particularly pleasant.

    • 0 avatar
      CarPerson

      Lorenzo,
      All I can say is “+1″.
      In three paragraphs you exceed what the main stream media has failed to properly convey to the citizens across this nation for the past 6 years.
      Nice job.
      CarPerson

  • avatar
    jim brewer

    There were no buyers for GM other than the government and the unions.

    Governor Romney got a lot of grief for the headline of his op-ed of “Let GM go bankrupt” but the body of what he wrote was worse; basically he proposed that the Government guarantee the debt, pay the warranty expenses and give the company to some John Galt type to run–Mitt Romney, for example. So sure, there is always some plutocrat willing to work a privatized gain socialized loss angle.

    The real question is why doesn’t the government own Bank of America and Citibank? We just gave them all the cheap money, almost no strings attached during the TARP program, then followed it up with quantitative easing programs, which appears to mostly go to shoring up the balance sheets of the bank and only marginally to the real economy.

    • 0 avatar
      thelaine

      The real question is why did the government bail out the UAW pensions as part of the deal? They could have still done the entire deal without the pension bailout, given UAW employees the same haircut Delco employees got, and saved taxpayers billions.

      The UAW pension bailout, which prevented the UAW employees from making any sacrifice whatsoever to their pensions, was not necessary to any bailout of GM. So why did it happen? How much did it cost. I’m thinking…oh, maybe about 10 billion dollars.

      I wonder why UAW workers got billions of dollars in taxpayer money to make their pension whole and Delco employees were forced to sacrifice a significant percentage of theirs?

      Nowadays, no one is ashamed to get paid off. They just point to someone else who got paid off and claim to deserve it more. Hey, at least I’m not a banker (or “bankster.” Get it, it’s a play on the word “gangster,” so it’s clever). Or a warmonger, cuz war is like, expensive and stuff and, you know, like, it’s totally not a solution. Also, oil companies get tax breaks so why can’t my ant farm get them?

      These days, it’s every man for himself and fk the country. Don’t try to pretend otherwise, GM and UAW. You sure as hell aren’t trying to pay the taxpayers back, I noticed. Just fk off, take your payoff and go away.

      • 0 avatar
        mikey

        @So that’s whats pi–ing you off today. A whole group of seniors managed to get,and,or, keep their “frozen for ever”, pensions.

        We were promised those pensions from day one. The hourly workers were the lowest paid people at GM. Do you have any idea how many workers blew all their savings on kids education? We all knew the pension was there for us.

        Sorry it didn’t work out in a way that would put joy in your heart.

      • 0 avatar
        Pch101

        “The real question is why did the government bail out the UAW pensions as part of the deal?”

        There is no question. The answer is hiding in plain sight:
        ____

        When Delphi spun off from GM in 1999, three unions (including the UAW) secured an agreement that GM would provide a retirement benefit supplement (referred to as “top-ups”) for their members should their pension plans be frozen or terminated and they were to suffer a resulting loss in pension benefits…

        …***No other Delphi employees had a similar agreement to receive a top-up, including salaried workers and hourly workers belonging to other unions.*** Over the course of events that unfolded over the next decade, the agreements with these three unions ultimately were preserved through the resolution of the bankruptcies of both GM and Delphi. Because Delphi’s pension plans were terminated with insufficient assets to pay all accrued benefits, and because PBGC must adhere to statutory limits on the benefits it guarantees, many Delphi employees will receive a reduced pension benefit from PBGC compared with the benefits promised by their defined benefit plans. ***Those Delphi employees receiving the top-ups will have their reduced PBGC benefit supplemented by GM while others will not.***
        ____

        http://www.gao.gov/products/GAO-12-909T

  • avatar
    mikey

    Well I’ve had my first cup of coffee now. So now I feel better. The whole bailout,bank rescue, mortgage crisis is an incredibly complex affair.

    Yes, we the rank and file came out of it relatively unscathed. Many others did not fare so well. I’m very greatfull that my pension survived. The company funded benefits are gone. But I can live with that.

    A whole lot of former GM workers, salary, and hourly came out of this mess with F.A. I’m very much aware of that.

    Sorry about the shame thing. Just caught me the wrong way at the wrong time.

    Have a good day!

    • 0 avatar
      thelaine

      Like I have said before Mikey, you are a stand up guy and I’m glad you got yours. I’m just tired of the rationalizing. The UAW had the political clout to take care of their members so they got the government to pay them off in exchange for political support. Pure and simple. Every other justification is B.S.

  • avatar

    This will end a sad chapter in GM history. I think it is good for everyone involved that the governments of US and Canada have decided to sell their stock sooner. In less than one year, they have sold off 439 Million shares. The remaining 211 million shares should be sold off within the next 6 months. This should remove all downward pressure letting the stock rise dramatically. The bailout couldn’t have been a win-win for all parties involved. If GM was loaned the money instead, they wouldn’t have been able to pay it back, putting them in the same situation they were before the bailout. While I agree the the UAW received preferential treatment for political reasons, they will continue to be an important part of GM and it was the correct thing to do. The $10 Billion loss will be more than offset with what we would have had to pay for unemployment benefits and welfare for not just GM workers but the cascading effect on other businesses. GM has already invested as much into North American operations. GM will be paying back many times over that in payroll and sales taxes in the coming years. Whatever the reasons, I think we can all agree that GM is much better off now than they were in 2008. 14 straight quarterly profits, stabilizing European operations, great products, and good reliability and satisfaction ratings. There is a lot of work ahead and GM still has a lot to prove. They are on the right track.

  • avatar
    mikey

    @ alluster..Well said, and I sure hope your right.

  • avatar
    jkross22

    As someone who was and still is very much against this type of taxpayer funded bailout, I am happy to see the government getting out of this mess. Once the taxpayer money is divested, minus the $10 billion loss, I’ll get some popcorn ready for the next round of bailouts.

    Those banks and car makers are still too big to fail. This guarantees we’ll see this action again.

  • avatar
    Lou_BC

    Politicians should of said, “we will bail you out, but you stop setting up shop in Mexico or South East Asia”.

    Should we feel all warm and fuzzy all over when we see the new Colorado sitting on the GM lots?
    (Engineered by Brazilians and tested and built in Thailand)
    Gotta love how our tax dollars helped the economy and all that.

    Shouldn’t GMC be celebrating its 4th birthday not 100th since old GMC died in 2008 with all of that extra debt and New GMC started right after?


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