On the campaign trail President Obama repeatedly claimed that we “got back every dime” used in the bailouts. Well, that was way, way back in … October. Today, the Treasury Department announced it was selling half of its stock in GM back to the company for $5.5 billion and will try to sell the rest over the next 15 months. The cost to the taxpayers for this? Probably in the neighborhood of $12 billion.
The New York Times reports:
According to a plan outlined on Wednesday, the Treasury Department will sell a little less than half of its stake, or 200 million shares, back to General Motors for $5.5 billion by year end. The purchase price of $27.50 is about 8 percent higher than the car maker’s closing price on Tuesday.
The Treasury Department will then sell its remaining 300.1 million shares within the next year to 15 months, depending on market conditions. Those sales could be through stock offerings or other means.
“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of G.M. among customers, and it demonstrates confidence in G.M.’s progress and our future,” Dan Akerson, the car maker’s chairman and chief executive, said in a statement.
According to the Treasury Department’s Daily TARP Update, the government has about $23.5 billion outstanding on its investment in GM. It has to date received $23 billion back of the $51 billion it originally lent the company. At this writing GM is trading at around $27.82 a share. Assuming the sale of the remaining stock receives a similiar price, the government will recoup only about $11 billion (that including the $5.5 billion today from GM) on that remaining $23 billion. Oh, and there is another $13.75 billion outstanding on Ally Financial, formerly GMAC, the financial arm of GM that was spun off into its own company.
Still, it proved to be big asset for Obama, who got to use “GM alive and Osama bin Laden dead” as his campaign theme and for whom the bailout arguably delivered rustbelt states like Ohio, Michigan, and Pennsylvania to him in the election. There are not many people who can spend $12 billion on their re-election bids and charge it to the taxpayers.
UPDATE: Some other news outlets are saying that the amount outstanding on the GM loan is $30 billion, not the $23.5 billion the Treasury Department reports. The discrepancy is because the government has already written off about $7 billion of the GM loans.