President Obama glowingly defended the $85 billion auto industry bailout during a speech to Detroit auto workers Friday, saying “the investment was worth it.”
But the government still owns 500 million shares of General Motors which, if sold at today’s market price of $20 a share, would leave taxpayers on the hook for $16.5 billion in losses.
The U.S. would have to sell its GM stock per $53 a share to break even, far higher than the $20 it is trading at now.
The stock liability puts the Obama administration in a double bind. If the stock were sold all at once, the market would be flooded with a half-billion shares, causing a precipitous drop in price and even greater losses for the United States. But holding on to them leaves a multi-billion dollar albatross around his neck, making the president’s rhetoric championing the unqualified success of the bailouts ring false.
Seton Motley at Less Government has a solution.
“GM is sitting on $34 billion in cash. To make our stock whole, it would cost $26.5 [billion],” he told The Daily Caller. We need “an orderly transaction of all 500 million shares from one owner to the other,” Motley argued, in order to avoid a drop in GM’s stock price.
Obama has been “touting GM as the Exhibit-A success story for government interloping in the private sector,” Motley noted. “So if he sells the stock and we lose $15 billion, how successful was it?
“If he holds on to the stock, the question then becomes, if it was such a success, how come the American people still own 500 million shares three years later?”