U.S. to sell GM stake in stages

[rickaren]

U.S. to sell GM stake in stages

Posted Wednesday, Jul 29, 2009, 1:13 pm in Employee News

The government will not sell its entire 61 percent stake in General Motors Co. all at once next year when it begins to return the company to public investors, the head of President Barack Obama’s auto task force said Monday in Detroit, the Detroit Free Press reported.

“Success” after the government’s intervention “will be measured by whether taxpayers get their money back,” Ron Bloom, senior adviser at the U.S. Treasury Department told the task force. But selling such a large percentage of the company in a short period could push the stock price down and limit the return on taxpayers’ investment, which in GM’s case exceeds $30 billion, the Free Press said.

Bloom appeared Monday before the Congressional Oversight Panel on the Automotive Industry Financing Program in a hearing at Wayne State University law school, the paper said. The panel wanted to learn more about the task force’s role in managing Chrysler and GM.

Sean McAlinden, chief economist at the Center for Automotive Research (CAR) in Ann Arbor, Mich., testified that doing nothing would have eliminated about 1.8 million jobs this year and next, the Free Press said. Under the current scenario, with both companies out of bankruptcy, McAlinden estimates 63,200 jobs will be lost this year and an additional 179,400 next year from automakers, suppliers and the ripple effect through lower retail and government spending, the paper said.

CAR also found that the government-backed bankruptcies prevented $114 billion in lost wages and lower tax receipts in 2009 and 2010, the story said. (Detroit Free Press)