Report: Fed mulling summer sale of GM stock, would take big loss

The Federal Reserve is eying a move to dump a large portion of its remaining General Motors stock this summer, a move that could see taxpayers lose nearly $11 billion on the deal. According to The Wall Street Journal, GM stock hasn't done nearly as well as banks and Fed officials predicted it would, falling to $29.97 a share on Monday, down from its $33-per-share IPO in November.
According to the Journal, the Fed would need to sell the stock at $53 a share to break even on its initial $50 billion GM bailout. High fuel prices have hurt sales of trucks, which provide lots of profit for GM, while bailing managers and shaky supply lines made investors nervous; none of which has helped stock prices any.

Despite the potential to lose lots of money on the GM bailout, it's thought that the Fed would like to be shut of all its GM stock before the end of the year to avoid possible controversy in an election year. No matter what happens, the Fed will have to wait to sell any of its stock until May 22, when the IPO lockout, which prevents the government from selling its stock, ends. Even with another month to go before the sale, GM stocks aren't likely to be in much better straits by the time the Fed is ready to sell.

[Source: The Wall Street Journal]

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