Government Sells Off GM Shares . . . Public Takes $10.5 Billion Bath

The federal government just cashed out on our General Motors shares and the final tally is a $10.5 billion loss. Many could still argue that this cost was worth it, but it is different from what has been represented to the public that we would lose no money on the deal. Indeed, the article below says that the White House delayed the final sale until after the election due to the implications of an over $10 billion bath. My concern is the lack of clarity and honesty surrounding the bailout. The public might still have supported the plan but it was not sold as an over $10 billion walkaway bailout.

U.S. Treasury Secretary Jack Lew confirmed that a $10.5 billion loss on the $49.5 billion bailout.

Notably, Treasury sold its stake in Chrysler Group LLC in July 2011 with a $1.3 billion loss on a $12.5 billion bailout. That is a total of $11.8 billion loss on these two companies.

Notably, the Administration decided not to require GM to repay its entire bailout and swapped the loans for the 60.8 percent ownership. It then bailed on its shares before recouping its losses after pushing the sale past the election. In hindsight, the decision to take shares instead of repayment looks like a politically useful way to forgiving debt while leaving the appearance of a public “investment” in the company.

Source: Detroit News