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Treasury To Be "Patient" In Selling Off GM Shares


General Motors 'GM' logo on background of cold, hard, U.S. cash money

General Motors 'GM' logo on background of cold, hard, U.S. cash money

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On Monday, General Motors stock fell to another all time low, trading briefly at $19.65 a share. That’s the first time the stock has dropped below $20 per share since GM went public last November, and it also represents a 40-percent drop in stock value since GM’s initial public offering at $33 per share.

If you’re an average investor in General Motors, that’s bad news. If you own 500 million shares of GM stock, like the Treasury Department, it’s a major headache that just won’t go away.

Based on current GM stock prices, The Detroit News reports that divesting in GM would produce a net loss of $16.5 billion on the government’s $49.5-billion bailout of the automaker. For the Treasury Department to break even, GM shares would have to sell for $53, and no one expects that to happen any time soon.

No actions are planned until GM reports its third-quarter earnings in November, even though the Treasury Department has had the ability to sell off the stock since a lock-up period expired last May.

In an interview with CNBC, Treasury’s Assistant Secretary for Financial Stability, Tim Massad, was quoted as saying, “We have to balance the goal of divesting these stakes ... with the goal of maximizing taxpayer returns.” We doubt that taxpayer returns will ever be maximized, so the only real question becomes how much of a loss is the Treasury Department willing to take?
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Comments (4)
  1. Good thing that GM's adds mention "Paid in Full" Where can the public get a loan like that?
     
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  2. We can get a loan @ less than 2% any day and every day. And we're busy using the cash fighting off the Taliban invasion and searching for the WMDs in the middle east. How come the billions we pay over there don't piss you off as much? Whatever we put into GM was money well spent - protected the jobs and the brand name from Chinese takeover instead of being syphoned off by a goat warrior.
     
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  3. That wasn't a loan. It was a give away. Re-pay 10% and advertise "Paid in Full" ???
    With my two tours in the middle east I see both sides of the debate.
    Freedom for your country and freedom to run your company to the ground are both rights in our constitution.
    Fighting for either are a personal choice.
    The latter was not mine or many others.
    GM's US sales reflect that resentment.
    Plus, Buick would be dead too if it wasn't for China's demand.
     
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  4. You're paying for GM and I'm paying for your tours. Neither one is a personal choice but I can tell you exactly which one is more beneficial.
     
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