So what did we get for government meddling in the GM/Chrysler reorganization?
1 – A union that hasn’t learned its lesson and now analysts predict it is just a matter of time before GM goes bankrupt again.
2 – Non union workers got screwed out of their retirement benefits deliberately and at the express direction of the White House
3 – Bond holders such as the Indiana employee retirement fund got screwed… in violation of the law and at the express direction of the White House.
4 – GM CEO Dan Ackerman brags on video that since the bailout 70% of GM manufacturing is now outside of the United States. Ackerman also announced that GM’s research and development division is moving to China.
5 – Chrysler/Jeep is expanding production…IN CHINA while taxpayer dollars are lost as in the GM bailout.
Now keep in mind that we were promised that the government would eventually make a profit in the deal just as we did when Reagan fixed the S&L crisis. We aren’t even getting cheaper cars out of the deal, unless of course you consider the government subsidized Chevy Volt that nobody wants and the taxpayers are took a shellacking on.
GM would have been fine if the government just stayed out of it, they would have reorganized with creditor protection form the courts just like every other company has who has gone through this process legitimately. Of course if that happened GM would have broke the over-reaching union who gives hundreds of millions in campaign money to Democrats. Anyone want a Twinkie?
The Weekly Standard:
The American taxpayers stand to lose billions as General Motors today announced a plan to buy back 40 percent of the company owned by the federal government.
“The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday,” the Detriot News reports.
However, the break even price — the price that GM would need to pay for each share in order to pay back the money the government put in to the company —was $53 a share. That number has now risen dramatically.
“As a result of GM’s buy back, the government has recovered about $28.6 billion of its $49.5 billion GM bailout, which means it will most likely lose billions when selling its remaining shares,” MLive.com reports. “The government would need to sell its remaining shares at a price of $69.72 to break even. That’s up more than $15 from earlier this year, when the U.S. Treasury would have to sell its 500 million remaining shares at about $53 per share.”
The U.S. Treasury initially owned nearly 61 percent of GM as part of the auto bailout, which forced the automaker and crosstown rival Chrysler through a government-backed bankruptcy.
The Obama administration completely exited Chrysler last year after recovering $11.2 billion of its $12.5 billion bailout to the Auburn Hills-based automaker.