The Treasury said Thursday it expects to sell its remaining stock in General Motors by the end of the year, ending the government’s controversial bailout and takeover of the leading automaker and closing an important chapter in U.S. economic history.
Treasury already has recouped $38.4 billion of the $50 billion auto bailout through sales of GM stock. It plans to sell its remaining 31.1 million shares by year-end, if prices hold up, recouping another chunk of the remaining debt owed to the government, but almost certainly not enough to fully repay taxpayers. GM shares rose 43 cents to $38.12 in New York trading Thursday; at that price, the government’s remaining shares would fetch almost $1.2 billion.
Treasury’s announcement about GM boosted the stock market Thursday and helped send the Dow Jones industrial average to more than 16,000 for the first time. For investors, it was only the latest sign that the economy is finally settling into a normal recovery and the effects of the most devastating recession in modern times are slowly receding into history.
Treasury Deputy Assistant Secretary Tim Bowler said the investment in GM at the height of the 2008 financial crisis and Great Recession — first by the George W. Bush administration and later by the Obama administration — paid dividends for U.S. workers and the economy. The auto sector is the largest U.S. manufacturing sector and feeds an array of ancillary industries from auto parts to steel and plastics.
“Had we not acted to support the automotive industry, the cost to the country would have been substantial — in terms of lost jobs, lost tax revenue, reduced economic production, and other consequences,” he said.
He said taxpayers can take some credit for the robust revival of the auto industry that has occurred since 2009, which has brought auto sales close to their peak of around 16 million units a year set before the recession.
“Our actions have enabled the industry to rebound,” he said. “All three American automakers are now profitable, and more than 340,000 new auto jobs have been created since GM and Chrysler emerged from bankruptcy in 2009.”
In a statement, GM said that the company continues to transform itself into a global auto titan, having learned much from its brush with insolvency in 2009.
“We’re making great progress in our efforts to make the most of this second chance by building outstanding cars and trucks, creating jobs and reinvesting in our country,” it said.
While the Treasury may not recoup all of the money it loaned GM through the stock sales, it already has more than recouped the total costs of all the major bailouts of banks, auto companies and insurance firms that the Treasury and the Federal Reserve carried out during the financial crisis.
The Treasury said it has raised $431.4 billion through sales of the shares and portfolios it took as collateral in those bailout deals, about $10 billion more than its total disbursements of $421.6 billion under the main bailout program, the Troubled Assets Relief Program.
Moreover, in a once-unimaginable development, the Treasury is within shooting distance of recouping its $189 billion bailout of Fannie Mae and Freddie Mac, as the mortgage giants have been posting sizable profits each quarter, which they must turn over to the government under the terms of their bailout.
• Patrice Hill can be reached at phill@washingtontimes.com.
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