GM asks to be set free, Obama says no.
The real reason the administration said no is obvious: A sale of government owned GM stock now would result in a huge loss and reveal the fallacious claims that the bailout was a good investment and the taxpayers would get their money back.
The Wall Street Journal reports that earlier this year GM wanted to reduce the 27 percent government ownership of the company left over from the $50 billion bailout in 2009. The automaker wanted the government to sell 200 million of its 500 million shares with the balance sold in a public offering.
The U.S. Treasury Department said no. The reason was clear. The Treasury Department would need to get $53 a share to break even on the bailout spending. But GM stock has been hovering at around $20 a share for months. If the government took the deal at the current GM stock price, the taxpayer would lose almost $15 billion.
This was a political as well as an investment decision. The mantra at the Democratic Convention was “GM is alive.” Speaker after speaker praised the GM bailout. There was no mention of the cost to taxpayers, only sign waving autoworkers and exuberant politicians from auto making states.
GM may be alive, but the Obama administration fears admitting the GM bailout cost to taxpayers. Voters should not expect the truth before Election Day.