U.S. sells last of GM shares, ending 'Government Motors' era
DETROIT -- The U.S. Treasury on Monday sold its last shares of General Motors stock, ending more than four years of government ownership in the nation’s largest automaker at a loss of about $10.5 billion to U.S. taxpayers.
The government said in a statement that it recouped $39 billion of its original $49.5 billion investment into GM. Company executives and dealers say that the stigma of federal ownership, which earned GM the derisive nickname “Government Motors,” has hurt sales.
“We will always be grateful for the second chance extended to us and we are doing our best to make the most of it,” GM CEO Dan Akerson said in a statement, a day before he announced his retirement. Mary Barra will take over as CEO on Jan. 15.
“Continued investments, innovation, and job creation are just some of the 'returns' of a healthy GM and domestic auto industry. Our work continues uninterrupted, and we will keep our sights squarely on our customers and transforming the way we do business.”
Talking to reporters at a press event in Detroit today, GM North America President Mark Reuss said he believes that the government’s exit could give GM a short-term sales lift and help its image in the longer term.
“I think probably some people will begin to consider us right away, maybe the next day,” he said, acknowledging that truck buyers “probably” have been most turned off by GM’s government ownership.
Reuss sent a Twitter message saying, “Free at last, free at last -- thanks to all of the hard work and those who gave us a chance.”
Reuss said that GM has spent “four years on the fundamentals” to become a more nimble company with a stronger focus on making quality cars and trucks.
Treasury Secretary Jack Lew told reporters on a conference call: "This marks one of the final chapters in the administration’s efforts to protect the broader economy by providing support to the automobile industry."
Lew said that the automotive industry has created more than 370,000 new automotive jobs since GM exited bankruptcy in the summer of 2009. “All three U.S. automakers are profitable, competitive, and growing,” he said.
GM shares today hit their highest level since they began trading publicly three years ago, rising to $41.16 before closing at $40.90. On Tuesday, the stock closed down 1.2 percent to $40.40.
The GM bailout was launched in late 2008 under President George W. Bush’s administration as part of the government’s broader, $421.8 billion Troubled Asset Relief Program, most of it to bail out lenders during the financial crisis. The funding was continued under President Barack Obama, which created an automotive task force to restructure GM and Chrysler.
The government gave GM about $40 billion in loans in exchange or a roughly 61 percent equity stake in GM. The bulk of the money recouped by the government came through periodic stock sales, including GM’s $5.5 billion purchase of 200 million shares in December 2012.
GM also made $6.7 billion repayment in 2010.
The Treasury lost about $1.3 billion on its $12.5 billion investment in Chrysler when it sold its remaining shares in 2011.
In a statement issued by the White House, President Obama said the bailout preserved about 1 million automotive jobs and helped to blunt the severity of the recession.
"When things looked darkest for our most iconic industry, we bet on what was true: the ingenuity and resilience of the proud, hardworking men and women who make this country strong," he said. "Today, that bet has paid off. The American auto industry is back."
GM has posted 15 straight quarters of profits since emerging from bankruptcy, racking up nearly $20 billion in net income.
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