WASHINGTON -- The U.S. Treasury now expects to lose $9.7 billion selling the General Motors stock it received in 2009 after its bailout of the automaker.
Taxpayers are still owed about $14 billion from the $49.5 billion in loans provided to GM, according to a quarterly report released today by the special inspector general for the Troubled Asset Relief Program, which bailed out GM, Chrysler and many of the nation's largest banks in 2008 and 2009. That figure takes into account the GM shares already sold, along with dividend and interest payments.
The Treasury started with 912 million shares in GM, a 60.8 percent stake in the company, as GM went through bankruptcy in 2009. Having sold 811 million of those shares as of Sept. 26, the government had a 7.3 percent stake in GM, worth about $3.6 billion at the company's current stock price. GM was trading for $35.69 per share at midday today.
The chances of taxpayers breaking even on the remaining stock are slim. For that to happen, GM's stock price would need to quadruple to more than $140, the report says.
Despite the losses, the Obama administration and most industry experts say that the alternative -- most likely, a liquidation of GM -- would have been worse, with hundreds of thousands of jobs lost in the United States.
In an e-mailed statement, a GM spokeswoman suggested the automaker's products -- widely regarded as improved since 2009 -- show it has made the most of its rescue.
"General Motors is rapidly becoming the company that everyone hoped when the government rescued the auto industry," she wrote, adding that GM is "producing cars that win in the marketplace under sound, smart management."
The federal government is on track to relinquish its GM holdings within a few months. The Treasury sold $570 million in GM stock last month as part of a plan to unload the last of its shares by the end of March.