Christy Romero, a special inspector general examining the corporate bailouts that came in the wake of 2008's financial crisis, has some advice for the U.S. government: "Treasury should develop a concrete exit plan for GM and Ally." She is referring, of course, to the 30-percent stake that the government still holds in General Motors and the 74-percent stake it holds in Ally Financial, formerly known as GMAC when the Treasury pumped $17 billion into it.

For its part, the government says it already has an exit plan and Romero doesn't offer any further advice to guide that plan in some other direction. With the calls for Treasury to divest coming even more frequently during the U.S. Presidential race, Treasury has repeatedly stated the same thing: it is waiting for the right time to maximize its return, thereby minimizing the loss to the U.S. taxpayer.

With 500 million GM shares in its portfolio, the government needs those shares at $52-per in order to recoup the remainder of its initial $50 billion investment. Shares are right around $20, which would mean a highly unpalatable Greek haircut if the government gave up its position. Recent GM moves have also led the Treasury to believe that there is unlocked value in the company that the market simply hasn't reacted to yet; however, that sentiment was voiced two months ago and the stock price still hasn't budged.

Ally Financial is a different conundrum, one that the Treasury seems to be much more eager to divest itself of. The financial firm has paid back $5.4 billion of its TARP loan and filed IPO paperwork a year ago, but there's still not even a potential date for an offering, and no one seems to have any idea when it will pay off the rest of the funds. While plans are debated for an offering or a breakup of the company, Treasury has suggested that GM buy back Ally, but GM hasn't indicated any desire to do so.

So in effect, nothing has really changed, but at least now we have more figures in the government suggesting that the government get out of GM.


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  • 45 Comments
      johnb
      • 2 Years Ago
      Rewarding failure and punishing success never works. it's like giving a treat to a dog after he takes a dump on your carpet. I expect more misery for those waiting to get the $30B back.
        MAX
        • 2 Years Ago
        @johnb
        So Hyundai, Kia, Nissan should not have been bailed out? How many car companies do you want left?
      Matrix
      • 2 Years Ago
      Its already too late, we are driving down the highway doing 120 in a Gm and we have no brakes.
      Hazdaz
      • 2 Years Ago
      Germany has owned a portion of VW for DECADES, but for some reason we need to cut our ties with GM immediately? Why? There the hell is the logic besides typical short-sighted American thinking? Yeah, eventually we should get out, but there is absolutely no reason to rush into it when we don't need to.
        ShiftItManual
        • 2 Years Ago
        @Hazdaz
        I agree. Why buy high and sell low? Just hold on to the shares until there is a better return. I don't see what the issue is with them doing that.
      protovici
      • 2 Years Ago
      What a mess. Since the auto industry makes approx. $125 Billion for the U.S. Government via taxes, I assume the loss in getting out will be just a temporary sting in the arm. What is another $50 Billion when Mr. O has already spent over $5 Trillion. Please leave GM so I can start liking them again.
        mapoftazifosho
        • 2 Years Ago
        @protovici
        Pathetic weak minded individual. Just because Obama was president for the latter half of the Auto Bailouts you can't like GM...if it helps your feeble mind just try to focus on the fact that GWB started the bailouts...
        icon149
        • 2 Years Ago
        @protovici
        "Please leave GM so I can start liking them again." wow is that ever a stupid sentiment. So you want the government to divest it's share in GM, at a pretty big loss, while the global economy is facing anther recession and slow down (Europe and Greece crisis), instead of just holding it and waiting for the economic conditions to improve... all because you want to "like" gm again? go on face book and "like" gm. i'd much rather have my tax money invested in GM than being spent by Washington.
          protovici
          • 2 Years Ago
          @icon149
          Huh??? Are you mad at something? GM seeing $52 a share, not in this life time. Seems you rather take a statement and make up your own opinion. Oh well lol.
        Dreez28
        • 2 Years Ago
        @protovici
        LOL!! What's another $50 Billion he says! You must have loans out the ass that you'll never pay back.
      • 2 Years Ago
      [blocked]
        merlot066
        • 2 Years Ago
        I'm not trying to troll your trolling, but there are a couple of very important things to consider. First, you need to factor all the income, payroll, social security, unemployment, and other taxes that have been paid for the past two years thanks to the fact that GM's 68,500 employees were not all let go. Then you need to factor in the same for the other employees of GM's suppliers who would have gone bankrupt if they had abruptly lost all of GM's business. Next you need to consider the other American plants that would have had to shut down if the supplier base had collapsed including most of Ford and Chrysler's plants, as well as Toyota, Honda, Hyundai and Nissan plants in the US and all those employees that would have gone from earning a paycheck and paying taxes to collecting unemployment checks. All told there are over 250,000 people employed directly by car companies, that doesn't even include suppliers. I'm a huge Ford fan but you can't deny the necessity to keep GM on its feet. Sure it's un-American to prop up a failed company, but it was just a perfect storm for GM that the housing bubble popped as they reached the peak of their incompentency. They were starting to get themselves set straight but an economic meltdown that sent car sales tanking was more than they could take. If you want to count every penny it cost against every penny we got back i'm sure it will have turned out costing us a great deal of money, but in the long run we were able to allow our domestic car brands to flourish and get back to producing mostly world-class vehicles.
          Gubbins
          • 2 Years Ago
          @merlot066
          So, if GM goes on a downhill slide...again...do we bail them out again?
          merlot066
          • 2 Years Ago
          @merlot066
          Who do you think was going to buy GM and Chrysler and possibly Ford back in 2008. GM couldn't even find a buyer for Saab or Hummer.
          turbomonkey2k
          • 2 Years Ago
          @merlot066
          You are working too hard to sell yourself a bill of goods if you subscribe to the notion that GM would somehow have shriveled up and disappeared if it weren't for the bailouts.
          Sugaki
          • 2 Years Ago
          @merlot066
          Setting up a strawman though. Not bailing out doesn't necessarily mean all 85,000 employees would've been let go. GM could've been bought out by a different company, or parts bought out by different companies and still function. The only possible scenario where all GM workers get let go is if the market determined that there aren't any assets worth investing in, which given the scope and influence of the company, would've been impossible.
          merlot066
          • 2 Years Ago
          @merlot066
          I wouldn't say anything with absolute certianty. While GM isn't making as dramatic a recovery product-wise as Ford and Chrysler they are doing a very good job and I think they've learned many lessons through the bankruptcy process. They did get away with a lot and there is a lot that I don't agree about with how it was handled (having most of their debt and past liabilities wiped away) but all three of them are much better prepared for an abrupt downturn in the car market. Most new plants are designed for ultimate flexibility and can go from triple shifts with overtime to single shifts with huge downtime without major issues.
        creamwobbly
        • 2 Years Ago
        If you count the same dollar twice, that doesn't make it two dollars.
      Sum Ting Wong
      • 2 Years Ago
      Doctors said that I would be dead in approximately 3 years. I hope that I do not live my last couple of years... 1. With Obama as President 2. GM still proclaiming that they "Run deep" but only into our pockets 3. The insane government doesn't give up and let GM out free and suffer a huge loss I am a middle class American who if this stupidity happens still can't afford to move to a different country and die a happy man.
      Dreez28
      • 2 Years Ago
      Why is everyone so eager for the government to get out of GM? Do you want to see your tax money wasted or paid back? Shut up and be patient.
        Hazdaz
        • 2 Years Ago
        @Dreez28
        Americans don't typically have a long-term view about anything, so I am really not that surprised about the backlash. Then again, its also politically motivated because the right-wingers WANT Obama to sell those shares at a loss so then they can turn around and say "see! see! we told you we'd lose money on the deal". The GOP will do anything and everything in its power to make sure this country fails.
          montoym
          • 2 Years Ago
          @Hazdaz
          You're partially right about one thing, those right wingers want Obama to sell the shares because they never felt that the Gov't should be in GM in the first place. As far as everything else you said, completely wrong. It's just a matter of them having a different definition of success than you do. Not that theirs is wrong or yours is wrong, just differing opinions. Or really to be more accurate, I think many people from all sides want similar outcomes (we all want to succeed for instance), we just differ greatly on how to get there. But hey, if fear-mongering, name-calling, and false attacks work for you instead, then there's no way to have a rational conversation with you.
          Chris
          • 2 Years Ago
          @Hazdaz
          Funny thing is that, back in 2004, those conservatives were saying the exact same thing you are saying today, that the liberals wanted to see this country fail in Iraq just so they can sit back and say "see, I told you so". I'm sure you thought those claims were irrational, so what makes the current situation any different? The point I am getting at is that all of this political bickering accomplishes nothing, and does more to divert attention from the issues at hand more than anything. This was never intended to be a permanent situation, so I think we all can agree that an "exit strategy" is needed. No?
      Ducman69
      • 2 Years Ago
      In Communist America, private industry owns government!
      Wetstuff
      • 2 Years Ago
      Obama has to watch out for Ally .. it could bite him in the butt big time in the next 100 days if any of Romney's friends can make it collapse 'in time'. I have never bought anything GM (not planning to) .. did not like the way it was run .. but there were simply too many people in the chain to allow it to come crashing down. I'd sooner see you folks with bad backs and 'nerve issues' punted off disability. Want a check: pick up the trash your throw from the car you don't bother to insure. Jim
        turbomonkey2k
        • 2 Years Ago
        @Wetstuff
        Except if you really thought it could come "crashing down" you've just demonstrated a grievous lack of comprehension of the scenario. The bailouts, both banking and automotive, were a power grab. make no mistake about it.
      creamwobbly
      • 2 Years Ago
      "So in effect, nothing has really changed, but at least now we have more figures in the government suggesting that the government get out of GM." False. Same people ("figures"), louder voices. Because everyone in the government has always thought the government shouldn't be in GM, right from the very start. It was the lesser of two evils: keep automakers' and suppliers' jobs in the US, or give the Pacific Rim automakers and suppliers an even bigger break.
      GasMan
      • 2 Years Ago
      Setting aside the arguments for getting in for right now, the government needs to get out for several reasons: 1. Promote self-sufficiency. You don't want the companies getting cozy with politicians to get an advantage. 2. It's good for the company. No more 'Government Motors'. The Chinese just raised tariffs on GM because they took government support (subsidies). 3. It's not going to get any better. Take the haircut, make a clean break, and just move on. 4. Public/private entities erode our competitiveness. Look at what is happening in France when Peugeot wants to shut down an unneeded plant. "We supported them and now they want to cut our jobs".
      caddy-v
      • 2 Years Ago
      Perfect compromise. Give whatever stock is still in the governments hands and offer it to Obama in cash to disapear to some remote region of the world for the next ten years and take that meatball Biden with.
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