Treasury Gets Ready to Lose Another $5.1 Billion on its GM Bailout
The Treasury Department announced that it would begin another round of sales of General Motors stock, with the hope of getting rid of its remaining 17.7% stake in the company in the next 12 to 15 months. Unfortunately for US taxpayers, this means the Treasury is essentially accepting a loss of $17.51 per share.
The government bailed out GM in late 2009 for $49.5 billion to prevent the troubled automaker from filing for bankruptcy. Some arithmetic shows that the government purchased shares at about $49.56 a pop. Since late 2010, it’s been reducing its stake in the company from a high of 60.4% to 17.7% today, according to data from ProPublica. As of today, shares of GM were trading for $32.05.
So if the Treasury sold its estimated 241.7 million remaining shares today, it would take a loss of about $5.1 billion just on its remaining stake in the company. The government may have actually turned a profit from bailing out Wall Street. The auto industry? Not so much.