US Treasury Completes Bailout of General Motors 425
Hugh Pickens DOT Com writes "Jim Puzzanghera writes in the LA Times that the federal government has sold its remaining shares of General Motors stock, ending the controversial $49.5-billion bailout of the automaker begun in late 2008 under former President George W. Bush. Although the GM bailout ended with a $10.5-billion loss for taxpayers, Treasury officials say the goal never was to turn a profit. The rescue prevented further damage to the economy and the potential loss of 1 million jobs says Treasury Secretary Jacob J. Lew. 'This marks one of the final chapters in the administration's efforts to protect the broader economy by providing support to the automobile industry.' At its height, taxpayers had a 60.8% ownership stake in GM. The auto bailout will rank as 'one of the most important interventions, maybe the most important, in U.S. economic history,' says Sean McAlinden, chief economist for the Center for Automotive Research. Without it, 'the upper Midwest would still be a gaping, double-digit unemployment hole in the economy, 600,000 retirees would've lost their pensions.' ... The Cadillac CTS was picked as Motor Trend's car of the year and the Chevrolet Impala was the first U.S. car chosen as the best sedan on the market by Consumer Reports in 20 years. 'We will always be grateful for the second chance extended to us and we are doing our best to make the most of it,' says GM CEO Dan Akerson. 'Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again.'"
Re:Is it just me, or ... (Score:4, Informative)
In more ways than we realize. The bailout of gm actually followed what Romney said, forced bankruptcy then a cash infusion apon restructuring. The bankruptcy negated a lot of pension liability but part of the cash infusion was paid by Canada's pension funds too. If we are taking a loss, i am almost certain they are too.
This also neglects all the pension funds that was looted when all of GM's stock and debt where invalidated as part of the bankruptcy. Detroit is even worse as municiple bonds has always been considered a safe bet as the governing authority can raise taxes to satisfy the debt but with its bankruptcy, it looks like it will be pennies on the dollar if anything is paid out. But detroit is another beast altogether.
Re:Is it just me, or ... (Score:5, Informative)
it wasn't just GM that had problems, it was just the only one that got bailed out
Ever hear of the finance industry, aka Wall Street? By comparison the GM bailout is lost in the noise. Moreover, there were actual consequences for the company and its management. On Wall Street the CEO's who steered their companies off a cliff (save for the US Treasury and the US Federal Reserve) didn't even lose their jobs. They congratulated themselves for being survivors, and great defenders of the free market. They got bonuses to go with the accolades. Best of all, there were no criminal investigations, despite very strong reasons to conduct them (search on "William K. Black" for details from a banking regulator who got 1000 criminal convictions after the S&L crisis, and thinks this one smells worse).
Re:Obama (Score:4, Informative)
Damn Democrats always messing with the free market.
Um, this started under GWB
To Tea Party Republicans, GWB was a Democrat.
the major parties are basically the same on all but cosmetic issues
Let's look at the facts [house.gov]:
Democrats: 205 in favor, 20 opposed
Republicans: 32 in favor, 150 opposed
Re:I think... (Score:1, Informative)
Except that the other automakers don't use the same parts chains:
* Chrysler uses Mopar
* Ford uses Motorcraft (I think)
* GM uses Delphi Automotive (I believe)
Re:You have no idea... (Score:4, Informative)
The reason demand suddenly dried up is explained perfectly well - because most people buy cars on credit, and there was a run on the banks (mostly by each other) and thus no money to lend for buying cars. It's the same reason other companies would not have had the capital to step up and take GM's place.
This experiment has been done before, in the 1930s. Sure, the economy recovered eventually, but the cost was catastrophic - not "just" the human cost, but the entirely avoidable decade-long reduction in GDP. We just re-ran the experiment with a different intervention and a much better outcome, except it doesn't seem like we made any fundamental changes to stop it from happening again.
Re:Is it just me, or ... (Score:4, Informative)
The money.cnn.com story you linked to is from November 16, 2009. Here is a link to a story on the same topic from Dec. 3, 2013 http://projects.propublica.org/bailout/list [propublica.org] Notice how the more recent one includes repayment information.