Despite claims to the contrary, the taxpayers are still very much the owners of General Motors, and the stock is becoming a bit of a hot potato in the hands of the Obama administration. On one hand, they don’t want to still be holding GM’s stock during the 2012 election year when it could become a campaign issue. But, if they sell it this year it mean losing billions.
At Monday’s price, and taking into account shares sold during the IPO, taxpayers would lose more than $11 billion on the rescue if the government dumped the rest of its stake now.
Government officials are willing to take the loss because the Obama administration would like to sever its last ties to the auto maker, the people familiar with the matter said. A summer sale makes it more likely Treasury could sell all of its stake in GM by year’s end, avoiding a potentially controversial sale in the 2012 presidential election year.
Keep in mind that the only reason why we bailed GM out to begin with was to keep the company from dispensing with the United Auto Workers’ extravagant labor contracts. If GM had gone into bankruptcy, those contracts could have been dispensed and entirely re-negotiated.
As it was, the taxpayers bought GM and guided it through extra-special bankruptcy during which President Obama’s friends at the UAW got extra-special treatment.