While the government is supposed to have sold off its stakes in General Motors by now, they still have stock that needs to be sold. The U.S. Treasury’s progress selling these stakes has been slow at best and government watchdogs are telling them they need solid exit plan. According to reports, the government still holds thirty percent of General Motors and a whopping 74% stake in Ally Financial, which is otherwise known as GMAC. This is from back in 2008 when the government turned over $17 billion during General Motors Chapter 11 situation. Of course, it is the government and that means nothing goes quite the way the general public expects and that includes selling off stock in one of America’s largest companies. The Treasury’s response is that they are waiting for the right time to maximize its return. They also say that they do have an exit plan although no one is getting many details about that.
While the thirty percent that the government is holding from General Motors needs to be released, it doesn’t seem to be as much of an issue as the 74% being held for Ally Financial. Apparently the government wants General Motors to reinvest, but they are not interested at this point.
Many are suggesting that the government “sell low” and just get out. But a special inspector for the government’s financial crisis era corporate bail out initiative Christy Romero states, “Although that would result in taxpayers getting out of these investments more quickly, it would decrease taxpayer return,” Romero said. “Treasury should develop a concrete exit plan for GM and Ally.”
From the sounds of it, the government will have its stake in the American automakers for quite some time now, unless that is any savvy stock market broker wants to make them a deal they can’t refuse.
Source Reuters