The U.S. Treasury’s bailout fund has lost about $9.7 billion on its rescue of General Motors Co. (GM:US) and would need to sell its remaining shares in the automaker for an average of $147.95 to break even, a report to Congress said.
The Special Inspector General for the Troubled Asset Relief Program in a report issued yesterday estimated the realized losses on all GM shares sold from November 2010 through Sept. 13, 2013, at $9.7 billion. At that point, the U.S. owned 101.3 million shares. If it sold those for yesterday’s closing price, the government would lose about $760 million more, bringing the total loss to about $10.5 billion.
The U.S. investment in GM was the biggest piece of an industry bailout that became a centerpiece of President Barack Obama’s first term. The Treasury has said it will sell its shares by early 2014. GM Chief Executive Officer Dan Akerson has said the government may exit before this year is over.
“The auto rescue saved our economy more than a million jobs and led to the revitalization of our nation’s domestic auto industry,” Representative Sander Levin, a Michigan Democrat, said in a statement. “General Motors and Chrysler -- not to mention Ford -- are thriving, in no small part thanks to the commitment from the Obama administration.”
The government is exiting Detroit-based GM as investor confidence has risen while the company introduces 18 new or redesigned vehicles in the U.S. The product surge is transforming its lineup into one of the freshest in the industry from the one of the oldest.
GM rose 0.7 percent to $36.06 at the close in New York. The restructured company held its initial public offering in 2010 at $33 a share. The shares gained 25 percent this year, exceeding a 24 percent gain for the Standard & Poor’s 500 Index.
The automaker declined to comment directly on the report.
“General Motors’ energies are fully focused on designing, building and selling the world’s best vehicles,” said Heather Rosenker, a GM spokeswoman based in Washington.
A second report to Congress yesterday, this one by the U.S. Government Accountability Office, estimated that GM’s stock price needs to reach $156 per share for Treasury to fully recoup its investment as of Sept. 16.
“The price of GM’s stock is not at the level needed for Treasury to fully recoup its investment,” the report said.
The auto rescue saved 1.14 million jobs in 2009 at automakers and companies that depend on the industry, according to the Center for Automotive Research. A collapse would have reduced personal income in the U.S. in 2009 and 2010 by $96.5 billion, costing the federal government $28.6 billion in extra jobless benefits and reduced Social Security contributions and income taxes in those years, the center said.
“The U.S. government intervention should be seen as the most successful intervention in the private sector in peacetime in U.S. history,” Sean McAlinden, the center’s chief economist, said in an e-mail.
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