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Gov’t sells more GM shares, cuts stake to 7 percent
New York » The U.S. government is starting another phase of selling off its General Motors stock after cutting its stake in the automaker to just more than 7 percent.
The Treasury Department says it still owns 101.3 million GM shares. It got 912 million shares, a 60.8 percent stake in the company, in exchange for a $49.5 billion bailout of GM in 2009. So far taxpayers have recovered about $35.4 billion. That means they're still around $14.1 billion in the hole.
To break even, the remaining shares would have to sell for nearly $140 each. At the Thursday morning trading price of $36.92, the government would get about $3.7 billion more. So taxpayers are likely to lose around $10 billion on the deal.
The Treasury plans to sell all of its shares by April 1.
The bailout was authorized under both the Bush and Obama administrations during the financial crisis in 2008 and 2009. At the time GM's sales had plummeted and it nearly ran out of cash to make payroll and service billions of dollars in debt.
The government said at the time that the bailout was necessary to save the American auto industry and stop the industrial Midwest from sliding into a depression. The Obama administration says bailing out GM and Chrysler saved more than a million American jobs.
The Treasury Department said it finished the second phase of selling GM stock on Sept. 13.
"The third trading plan will allow us to continue exiting the investment in accordance with our previously announced timetable while maximizing the taxpayer's return," Tim Massad, assistant treasury secretary for financial stability, said in a statement.