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Canada Bails Out of GM Stock for $2.7 Billion

Government sells its shares to Goldman Sachs.

by on Apr.07, 2015

Unifor President Jerry Dias said the Canadian government shouldn't sell its stake in GM in order to have some leverage in manufacturing decisions.

Government Motors is now officially dead: really. The Canadian government announced it is selling its $2.7 billion stake in General Motors Co. to Goldman, Sachs & Co. by the end of this week.

The Canada GEN Investment Corp., a subsidiary of Canada Development Investment Corp., plans to sell its 73.4 million shares of GM in a single unregistered block.

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The government received the shares as part of the 2009 bailout of the company, and more details about the sale will be available in the “next several days” after Canada GEN reports the trade with U.S. and Canadian securities regulators. (more…)

Government Lost $9.26 Billion Saving Auto Industry

Treasury made more than $2 billion on GMAC deal.

by on Dec.30, 2014

The Treasury exited GM more than four years after the maker's 2009 bankruptcy.

The U.S. government lost less than $10 billion rescuing the auto industry, which was four times less than some estimates.

The Treasury initially estimated the loss would be $44 billion, but revised it to $30 billion in 2009. Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper because interest and dividends paid isn’t applied toward the principal owed.

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The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. (more…)

Taxpayers Taking Bigger Hit on GM Bailout

Total rises to $11.2 billion after accounting error.

by on Apr.30, 2014

The government bailout of General Motors is going to cost taxpayers $11.2 billion: $826 million more than originally expected.

U.S. taxpayers are taking a bigger loss on the General Motors bailout package than $10.3 billion originally reported. Due to an accounting error, the loss is actually $11.2 billion, according to a report released today.

The Treasury Department reported an $826-million administrative claim had been written off on March 20. However, the claim, which has not been revealed, cannot be written off.

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The figure surfaced in a report by the Office of the Special Inspector General for the Troubled Asset Relief Program, which was charged with overseeing the federal government’s economic stimulus program. (more…)

Old Problems Still Likely to Dog New GM CEO Mary Barra

Behind Barra’s unlikely ascent from shop rat to chief executive.

by on Jan.16, 2014

GM's new CEO Mary Barra celebrates while watching GM sweep the 2014 North American Car and Truck of the Year awards.

General Motors moved into a new era this week as its first woman chief executive took over the reins from Dan Akerson, the gruff graduate of the U.S. Naval Academy at Annapolis, who guided GM out from under government control.

GM veteran Mary Barra will likely face a level of unprecedented scrutiny, said her mentor and predecessor, as she assumes a control of a global company with both newfound momentum and an assortment of serious challenges – among the need to continue regaining share in its home market, a European subsidiary that has been operating deep in the red for 14 years, and increasing competition in the critical Chinese market.

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However, the 51-year-old Barra is no stranger to hard work. When she joined GM as an 18-year-old co-op student at GM’s new-abandoned Pontiac Motor Division, she followed her father, a die-maker and member the United Auto Workers Union, into the factories in Pontiac, Michigan.


GM CEO Akerson Rejects Repaying Government for Losses

“The die was cast,” said executive.

by on Dec.17, 2013

GM CEO Dan Akerson said the government took the same risks as other investors.

Soon-to-retire General Motors Chairman and CEO Dan Akerson has said thanks, but no thanks, to suggestions the now-profitable automaker should pay back the roughly $10 billion the U.S. Treasury is believed to have lost on its 2009 bailout of the then-bankrupt automaker.

Speaking at the National Press Club in Washington, D.C., Akerson told his audience that the government took a risk like any other investor – including those wiped out when GM filed for Chapter 11 protection.  And, the CEO stressed, the bailout was far less expensive than the tens of billions of dollars in lost taxes and other revenues that would have been lost if GM had gone out of business.

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“I would not accept the premise that this was a bad deal,” said Akerson, who plans to retire on January 15, when his protégé Mary Barra becomes the first woman CEO at a major auto manufacturer. “The die was cast” when the government decided to take shares rather than make its investment in the form of a loan, Akerson emphasized.


US Treasury Sells off Final Shares of GM

“Government Motors” is now a completely private enterprise.

by on Dec.09, 2013

The Treasury exits GM more than four years after the maker's 2009 bankruptcy.

Call it “Government Motors” no more.  More than four years after it emerged from bankruptcy with the help of a $49.5 billion federal bailout that left American taxpayers holding the majority of the company the U.S. Treasury has sold off its final holdings in General Motors.

Wall Street traders have been reacting strongly to news that the White House was set to get out of the auto business, GM shares setting surging during Monday trading after last week topping the $40 mark since the maker’s November 2011 IPO.  Among other things, the maker will now be in a position to pay dividends on its common stock and to raise the pay of senior managers without first getting approval from the administration’s pay czar – limits enacted as part of the terms of GM’s bailout.

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“The U.S. Treasury’s ownership exit closes just one chapter in GM’s ongoing turnaround story,” said GM Chairman and CEO Dan Akerson.  “We will always be grateful for the second chance extended to us and we are doing our best to make the most of it. Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again.


GM Bailout Saved 1.2 Mil Jobs, According to New Report

Feds to sell off last stake by month’s end.

by on Dec.09, 2013

Bailout "put food on the table for 10s of 1,000s," says GM Pres. Mark Reuss.

The federal government bailout of General Motors spared at least 1.2 million U.S. jobs, according to a new report – and even though taxpayers will lose more than $9 billion on the rescue effort, that was more than offset by nearly $40 billion in additional taxes generated in just the year the government pulled the beleaguered automaker out of bankruptcy in 2009.

The white House has been rapidly selling off its final shares in what critics have called “Government Motors,” and expects to be completely out of the automotive business by the end of this month.  The most recent Washington forecast indicated taxpayers could lose $9.7 billion on the bailout, though the rapid run-up in GM stock this past month could trim that loss, analysts note.

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“Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment,” declared authors Sean McAlinden and Debra Maranger Menk, in the study, “The Effect on the U.S. Economy of the Successful Restructuring of General Motors,” released today by the Ann Arbor, Michigan-based Center for Automotive Research, or CAR.


GM’s Eroding Market Share Raises Concerns

Strong reviews do little to buoy GM’s position.

by on Nov.04, 2013

Even strong 3rd-party endorsements for products like the Cadillac ATS have failed to boost GM's share.

Despite winning wide praise for its improving quality and well-reviewed new products, General Motors has been steadily losing market share, and that is raising concerns about the maker’s competitiveness, according to a new report from the General Accounting Office, which continues to monitor the U.S. Treasury Department’s investment in the Detroit maker following its 2009 bankruptcy.

The Treasury took a majority stake in GM but has been rapidly selling down its shares in recent months and expects to sell off the last of its holdings by next April – with the latest government report estimating taxpayers will ultimately lose about $9.7 billion on the bailout.

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On the positive side, the GAO report said the globe’s second-largest maker “has shown increasingly positive financial results” since its emergence from Chapter 11 protection, with “positive and growing operational cash flow, and a stable liquidity position.”  On the downside, “However, GM faces continued challenges to its competitiveness. For instance, its market share of vehicles sold in North America remains smaller today than in 2008. Furthermore, GM continues to carry large pension liabilities,” the report noted.


GM Share Price Needs to Nearly Triple for Taxpayers to Break Even

Maker’s stock on a rise – but too little, too late.

by on Jul.24, 2013

GM's stock price would have to nearly triple to $95.51 for taxpayers to break even on the loan bailout package.

The good news for shareholders is that General Motors shares are on a rise, gaining more than 25% in value so far this year – and reaching a $37.45 high during Wednesday trading before settling back a bit.

Good news, perhaps, but not good enough for U.S. taxpayers who received 61% of GM’s equity in exchange for a $50 billion bailout linked to the maker’s 2009 bankruptcy. While the increase is likely to benefit the U.S. Treasury as it continues selling down its stake in the Detroit maker, the latest report by a special federal watchdog cautions that GM shares would have to nearly triple – to $95.51 a share – for the government to break even.

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“There’s no question that Treasury, the taxpayers, are going to lose money on the GM investment,” Special Inspector General Christy Romero told the Associated Press.


GM Abandons the Big Apple

Corporate treasurer, long based in NY, returns to Motown.

by on May.22, 2013

The GM Building in New York.

General Motors will close its New York Treasurers office and move the operation to Detroit by the middle of next year in what amounts to a wholesale shakeup of GM’s corporate culture, which has long been dominated by finance operating from offices high above Manhattan’s traffic clogged streets – and arguably out of touch with the maker’s Detroit headquarters or the rest of the country.

For decades, the New York office, which keeps track of GM’s cash and finances, has served as GM’s nerve center.  In fact, for many decades, the giant automaker’s powerful chairman, starting with Alfred P. Sloan, was based in the Big Apple, rather than Detroit.  Since the 1950s, New York is where high potential employees on the fast track went to win promotions to big jobs inside or even outside GM.

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Until 2009, GM Chairmen including the late Roger Smith, Jack Smith, Rick Wagoner and Fritz Henderson — Henderson the last man standing when GM filed for bankruptcy — had all worked in the New York office.