Uncle Sam should sell his GM shares
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The Obama administration needs to start selling the federal government's stock in General Motors.
The U.S. Treasury still holds about 500 million shares of the GM stock it received in exchange for the 2009 bailout. That's some 32 percent of GM's common shares, normally more than enough to control a public company -- though GM and Treasury officials say the government exerts no influence in the GM boardroom.
But GM executives chafe under the image of working for Government Motors, which also hampers the company's ability to recruit talent because of Treasury limits on executive compensation. The stigma of GM's being government-owned likely dissuades some consumers from considering its products.
It is undeniable that the bailout was a success. Despite the woeful situation at Opel in Europe, GM is healthy. The balance sheet is strong because the crushing debt was swept away. Sales and profits are strong because the product portfolio is improving. What's missing is independence.
For taxpayers to recoup all the bailout money, Treasury would need to sell its GM stock for about $53 a share, roughly double its current market price. That's not going to happen anytime soon.
By some accounts GM's share price is undervalued, which means Treasury officials may be tempted to wait. But even if taxpayers don't get back every last nickel, the GM bailout was worth it, and the government should begin to divest its GM stock. If the stock is undervalued, this is a great time for the company, its directors and executives to buy some of the government's GM stock.
It has been nearly 42 months since the old GM filed for Chapter 11 bankruptcy on June 1, 2009. By comparison, it took just 44 months from the attack on Pearl Harbor for the United States to defeat Japan in World War II.
The battle to save GM is over, and it's high time to end the era of Government Motors.
