US Treasury Plans For Early Sale Of GM Shares

[William Maley]

US Treasury Plans For Early Sale Of GM Shares

William Maley - Editor/Reporter - CheersandGears.com

February 27, 2011

The US government is planning to sell off the remaining share of GM it owns rather than wait for the stock price to get higher to max out the investment. Austan Goolsbee, the chairman of the Council of Economic Advisers spoke at a breakfast with reporters.

"The writing is clearly on the wall that the government is getting out of the GM position. The government never wanted to be in the business of being majority shareholder of GM. It was only to prevent a wider spillover, negative event on the economy. So we're trying to get out of that," said Goolsbee.

Some analysts analyzed Goolsbee's comments as the government would sell their shares, no matter the price. Certain people, including former automotive czar, Steven Rattner, say the government should hold onto the shares until the price gets higher. Asked about why the government isn't holding onto the shares until GM's stock price is higher Goolsbee said,

The Treasury "is just trying to — in whatever is the most reasonable way — phase out of the government's involvement. We're not trying to be Warren Buffet and figure out what the market is doing."

Last year, the US government sold 28% of their share in GM reducing their total to 33%. If the government was to sell their remaining shares at the current stock price, they would stand to lose $10 billion from their $49 billion investment.

Source: The Detroit News: Treasury planning early sale of GM shares

[loki]

Surprise! the gov looses money on it's "investment"

[Drew Dowdell]

they'll get it back in tax dollars from the 2.5 million or so people still employed.

[Satty]

they'll get it back in tax dollars from the 2.5 million or so people still employed.

Except those earning more than $250,000/year

[balthazar]

Government = No. concept. of. financial. responsibility. whatsoever.

[ZL-1]

One should offset the 10 billion dollars loss against all expceted future income taxes to be paid by GM staff and GM itself (I know about the loss carryforwards applying to post bankruptcy GM).