Government Motors still owes taxpayers
IN 2009, the Treasury Department kept General Motors alive with a $50 billion bailout from taxpayers. The government sold a big chunk of the public's share in 2010, when shares of the shored-up company were pegged at $33 per share.
But taxpayer-shareholders have long since lost track of what happened to their forced investment in what immediately became known as "Government Motors."
An update, thanks to Jeff Bennett and Sharon Terlep of The Wall Street Journal:
The government has recovered about $23 billion of what it gave GM.
But GM hates its nickname and the pay restrictions that go with it. It wants to buy back 200 million of the roughly 500 million shares the public still owns, and it wants the Treasury to sell the rest through a public stock offering.
But GM stock, which analysts expected could hit $50 per share, was trading at $24.14 on Friday.
Were the U.S. were to sell its entire stake now, taxpayers would lose $15 billion. GM stock would have to reach $53 per share for taxpayers to break even.
That is not expected to happen in the near future.
A Treasury official has said the government does not want to be a long-term GM stockholder, and wants also to "maximize taxpayer returns."
The Obama administration last month increased to more than $25 billion its estimate of how much the American public could lose on the $85 million auto industry bailout. (That included aid to Chrysler Group LLC, which has repaid the Treasury.)
Losses of that magnitude obviously pose a political problem, and should.
After all, the bankers of last resort - taxpayers - were forced to rescue a lot of other sick puppies as well - banks, AIG, Fannie Mae, Freddie Mac, etc. (The public made a profit on the bank deal, and AIG is headed in the right direction.)
But Fannie Mae and Freddie Mac, which received $188 billion, are still writing in red ink.
Taxpayers lost $16 trillion in household net worth in the financial crisis. They have since regained some ground, but they now find themselves with $16 trillion in national debt - $5 trillion of that under Obama.
Make no mistake. Taxpayers, not the politicians who redirect their earnings and borrow even more, "build that."