US Treasury Tries to Find Exit Plan for GM and Ally image

The Obama administration plans to develop a plan to impel the US Treasury progress in selling GM and Ally Financial stakes.

“Market conditions have slowed Treasury’s progress. In addition, due to the enormity of Treasury’s stake, it could take a number of years for Treasury to sell at or above break-even,” Christy Romero, special inspector general for the Troubled Asset Relief Program.

Currently the Treasury owns 74% stake in Ally and 26.5% in GM, three years after the government’s auto bailout. The government plans to sell its shares even below break-even prices. Romero said that even if this plan would decrease taxpayer return, taxpayers will get out of these investments more quickly.

The Treasury invested over $50 million in GM and didn’t manage to sell any share since 2010. To break even on the bailout it would need to sell the remaining stake of 500 million shares at over $52 each. But the stock is currently trading just above $20, down from $33 in November 2010. Even if the Treasury manages to sell a big part of Ally stock in an IPO, it would still take more than a year to dispose of its ownership stake.