Barack Obama saved General Motors with his words–and you paid for it with your money. The Obama administration said the government will sell 40% of its ownership, amounting to 200 million shares, back to GM, and will exit ownership by March 2014.
GM will buy those 200 million shares of GM stock for $27.50 per share, for a total of $5.5 billion. This means the government’s share of GM will fall from 26.5% to less than 19%.
Taxpayers are expected to lose more than $13 billion at GM’s current stock price.
GM CEO Dan Akerson boasted:
Today, GM and the U.S. Treasury are putting in motion a plan that will begin to close the books on the extraordinary government assistance that saved the company and our industry. It has never been far from my mind that taxpayers rightfully expected us to change the way we do business in exchange for a second chance. We are learning to be humble and to genuinely appreciate every customer.
Akerson didn’t get to be the boss of GM without imbibing from the same political heroes as his boss in the White House; in 2011 he said:
Whoever comes after me; it’s going to be a more important appointment than mine because he or she will have to carry on a cultural revolution here. It’s just like the Communist Party in China in the 1960s, there has to be a cultural revolution here.
The bailout was started by George W. Bush with $7.5 billion for GM and $60 billion was thrown in afterward by Barack Obama and Chrysler’s auto finance arms.
The taxpayers lose in another way; the Treasury expects to lose $24.3 billion on the auto bailout. Guess who will pay for that?