The U.S. government said yesterday it expected to sell its remaining shares of General Motors Co by the end of the year, a plan that may leave taxpayers with a loss of about $10 billion on the automaker’s 2009 bailout.
The Treasury Department’s intention to sell the last remnant of its GM stake highlights a remarkable recovery staged by the U.S. auto industry since the nearly $50 billion taxpayer-funded rescue of the largest of the Detroit 3 automakers.
U.S. auto sales through October have risen 8.4 %, with sales expected to top 15.5 million for the full year – well above the recessionary trough of 10.4 million in 2009.
“Our goal was never to make a profit,” said a Treasury official who requested anonymity. “It was to save the U.S. auto industry.”
Even so, Washington’s move also calls attention to how much the unprecedented bailout, implemented under the government’s Troubled Asset Relief Program (TARP), has cost taxpayers.
As of Thursday, the government said it had completed the sale of 70.2 million shares of GM stock, and to date had recouped $38.4 billion of the $49.5 billion investment.
At current prices, Treasury would recoup another $1.2 billion from its remaining stake of 31.1 million shares, bringing its total recovery to $39.6 billion. Treasury said its initial cost basis for the GM shares was $43.52 a share, compared with a closing price of $38.12 on Thursday.
The Obama administration has said repeatedly it wanted to get out the business of holding shares of private companies as soon as practical, but it wanted to protect taxpayers by selling when the time was right.
Despite the likely loss on the GM investment and TARP-related housing programs, taxpayers eventually could end up in the black for TARP overall. To date, TARP has disbursed $421.6 billion while recovering $413.8 billion.