US exits GM stake with a $10 billion loss
10 Dec 2013
The US government has exited automaker General Motors Co with the sale of the remaining shares it acquired in a historic bailout in 2009, leaving the treasury short of about $10 billion of taxpayer's money.
The amount that the US treasury collected from the sale of the last remaining shares, however, was $10 billion short of the taxpayer money that the treasury sank into the automaker in 2009.
The amount that Washington invested to rescue the US auto sector during the 2007-09 financial crisis, was part of the $700 billion the nation pumped into the US banking system to bail out the housing and auto sectors during its darkest days since the Great Depression of the 1930s (See: US auto industry bailout: The Big Three go up the Hill).
"This important chapter in our nation's history is now closed," Treasury Secretary Jack Lew said.
Despite losses on programmes to help housing and autos, the rescue efforts helped save taxpayers from heavy losses the Wall Street depression would have brought about.
The government took a loss of more than $1 billion on its investments in Detroit automaker Chrysler, while the US government still remains invested in GM's former lending arm, Ally Financial Inc.
The auto bailout helped Detroit's carmakers return to profitability, and according to a study released on Monday by the Centre for Automotive Research, the rescue helped save 1.5 million US jobs and preserve $105.3 billion in personal and social insurance tax collections.
"When things looked darkest for our most iconic industry, we bet on what was true: the ingenuity and resilience of the proud, hardworking men and women who make this country strong," President Barack Obama said.
The $49.5 billion bailout brought General Motors, America's largest automaker and a symbol of the country's industrial prowess for generations, out of its 2009 bankruptcy and into profitability, although it lost its earlier glory.
''The U.S. Treasury's ownership exit closes just one chapter in GM's ongoing turnaround story. 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,'' General Motors chairman and CEO Dan Akerson said.
GM recorded a profit of $4.3 billion for the first nine months of this year. Shareholders have also profited, although gains in the company's shares since its 2010 public offering have trailed far behind a broader stock market rally.
With the government's exit, GM will now be allowed to pay dividends for the first time since the IPO. GM also may be able to offer a more generous and competitive compensation package if its board elects to search for outside candidates to succeed Akerson.
General Motors Co its subsidiaries and joint venture entities sell vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling brands and has operations in 30 countries.
