Treasury Department to End Bailout of GM
On Wednesday, the Treasury Department said it expected to end its bailout of $49.5 billion of General Motors over the next year to 15 months. The exit by the Treasury Department will most likely be at a large loss to taxpayers.
At this time, the Treasury has close to 500 million shares of stock in General Motors, but the auto manufacturer will buy about 200 million at the price of $27.50 per share before the year ends. Currently GM stock is selling at $25.55 per share.
The Treasury said it would then sell off what remained through a number of different means over a period of time. The agency would not detail how it planned to market the share that would remain, saying the plan depended on a number of different factors.
The Congressional Budget Office, in October, estimated that the bailout of GM would cost the federal government nearly $20 billion, while the cost was placed at $25 billion by the Office of Management and Budget. The official watchdog of the government for bailouts estimated that the remaining GM shares would have to be sold by the government for $53.98 if it wanted to break even.
The report from October by the Special Inspector for the Trouble Asset Relief Program said that even when the government take the interest and dividends into account it may receive from the automaker for its investment, it still would have to sell its shares for over $52.39 to avoid any loss.
The move by the Treasury marks another exit from a high profile company of the financial crisis and brings to an end the move made by President Obama that was not looked upon well by the right, but helped him win reelection.