With animosity toward the TARP bailouts still rampant, the U.S. Treasury is moving closer to evening its books by selling off another batch of General Motors (NYSE:GM) stock. In its latest effort to give up its position as GM stakeholder, the government announced it is letting go of 30 million shares and selling high at $34.41, to bring over one billion dollars to Treasury coffers.
The sale leaves the government in possession of nearly 190 million shares of GM, which received a bailout of nearly $50 billion to avoid bankruptcy several years ago. While critics have pounded the automaker for taking the government money, advocates of the intervention say saving the U.S. auto industry was worth it. The latest stock dump by the government will put the amount of money recouped by the U.S. over $32 billion, still well short of its investment in GM.
After selling its remaining shares of GM, it’s likely the Treasury will end up $10 billion short. While the government expected losses on some scale for the bailouts, the auto industry might be the only sector that does not pay back the full amount. Nonetheless, the price where the government is selling lies right at the 52-week high for GM and comes at a highly positive moment for the automaker as it reenters the S&P 500.
Now that GM is back on Standard & Poor’s index, analysts see the stock as primed for movement upwards. Since the IPO at $33 a share, GM has taken a long ride back to its current mark (it stood at $22 one year ago). CEO Dan Akerson has mentioned it’s not out of the question for GM to start offering dividends to investors, and it’s possible the company could start buying back shares. However, the company may be better off putting capital back into its business and doing what great car companies do (namely, produce coveted vehicles).
As for the question of the overall investment of the government in its TARP bailouts, it’s likely the entire $500 billion will be back in the Treasury’s hands once it exits GM completely. The auto industry might be the one part of the balance sheet showing red, but government officials contend saving the auto industry — and the jobs that go with it — were worth a few billion dollars in the end.
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