GM no longer Government Motors
#1
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GM no longer Government Motors
well only an $11Bn loss on the union bailout... still, glad it's over.
http://www.forbes.com/sites/joannmul...ound-any-more/
The U.S. Treasury today announced that it has sold all of the remaining shares of General Motors GM +1.82% common stock, ending four-and-a-half years of government ownership.
Taxpayers recouped about $39 billion of the $50.1 billion pumped into GM in late 2008 and 2009 as the Bush and Obama administrations tried to save the car maker from collapse after years of mismanagement brought to a head by a crippling credit crisis and economic recession. The sale will put an end to restrictions on executive pay, which will help GM attract top talent, and could pave the way for new dividends or share repurchases, both of which would please investors.
Historians, economists and politicians will continue to debate whether the bailout was a good idea, but there was no disagreement Monday that it was good for this episode to be over.
“The President’s leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression. With the final sale of GM stock, this important chapter in our nation’s history is now closed,” said Treasury Secretary Jacob J. Lew.
“The U.S. Treasury’s ownership exit closes just one chapter in GM’s ongoing turnaround story,” said GM chief executive Dan Akerson. “We will always be grateful for the second chance extended to us and we are doing our best to make the most of it. 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.”
Despite the $11 billion loss on the GM bailout, the Treasury Department was quick to point out that it has recovered a total of $432.7 billion on all investments under the Troubled Asset Relief Program (TARP) – including the sale of its shares in AIG – compared to $421.8 billion disbursed. Treasury said it will continue to wind down the remaining investments”in a manner that balances maximizing the taxpayer’s return on investments with the speed of our exit.”
A study released Monday by the Center for Automotive Research concluded that the government bailout of GM spared 1.2 million jobs in 2009 and preserved $39.4 billion in personal and social insurance tax collections in 2009 and 2010. “Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment…” researchers Sean McAlinden and Debra Maranger Menk wrote in “The Effect on the U.S. Economy of the Successful Restructuring of General Motors.”
“If the U.S. government had refused to assist (GM and Chrysler)… in a financial crisis of unprecedented proportions, then the whole U.S. economy was operating without a safety net, with the exception, of course, of the banking system,” McAlinden and Maranger Menk conclude. The center independently funded the new study as a follow up to a November 2008 analysis.
“The bottom line is that a failed GM would have left a lot of collateral damage,” said Karl Brauer, senior analyst at Kelley Blue Book. “Instead, GM is profitable, it’s making the best products in its 100-plus-year history, and it’s growing sales in the U.S. and globally. In looking at the recent history of government intervention, this one rates pretty well.”
Not everyone will agree, however, and GM may never fully recover from the bruises to its reputation inflicted by its dependence on government assistance.
But Akerson said a now-healthy GM is focused on the future. “Continued investments, innovation, and job creation are just some of the “returns” of a healthy GM and domestic auto industry. Our work continues uninterrupted, and we will keep our sights squarely on our customers and transforming the way we do business.”
Taxpayers recouped about $39 billion of the $50.1 billion pumped into GM in late 2008 and 2009 as the Bush and Obama administrations tried to save the car maker from collapse after years of mismanagement brought to a head by a crippling credit crisis and economic recession. The sale will put an end to restrictions on executive pay, which will help GM attract top talent, and could pave the way for new dividends or share repurchases, both of which would please investors.
Historians, economists and politicians will continue to debate whether the bailout was a good idea, but there was no disagreement Monday that it was good for this episode to be over.
“The President’s leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression. With the final sale of GM stock, this important chapter in our nation’s history is now closed,” said Treasury Secretary Jacob J. Lew.
“The U.S. Treasury’s ownership exit closes just one chapter in GM’s ongoing turnaround story,” said GM chief executive Dan Akerson. “We will always be grateful for the second chance extended to us and we are doing our best to make the most of it. 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.”
Despite the $11 billion loss on the GM bailout, the Treasury Department was quick to point out that it has recovered a total of $432.7 billion on all investments under the Troubled Asset Relief Program (TARP) – including the sale of its shares in AIG – compared to $421.8 billion disbursed. Treasury said it will continue to wind down the remaining investments”in a manner that balances maximizing the taxpayer’s return on investments with the speed of our exit.”
A study released Monday by the Center for Automotive Research concluded that the government bailout of GM spared 1.2 million jobs in 2009 and preserved $39.4 billion in personal and social insurance tax collections in 2009 and 2010. “Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment…” researchers Sean McAlinden and Debra Maranger Menk wrote in “The Effect on the U.S. Economy of the Successful Restructuring of General Motors.”
“If the U.S. government had refused to assist (GM and Chrysler)… in a financial crisis of unprecedented proportions, then the whole U.S. economy was operating without a safety net, with the exception, of course, of the banking system,” McAlinden and Maranger Menk conclude. The center independently funded the new study as a follow up to a November 2008 analysis.
“The bottom line is that a failed GM would have left a lot of collateral damage,” said Karl Brauer, senior analyst at Kelley Blue Book. “Instead, GM is profitable, it’s making the best products in its 100-plus-year history, and it’s growing sales in the U.S. and globally. In looking at the recent history of government intervention, this one rates pretty well.”
Not everyone will agree, however, and GM may never fully recover from the bruises to its reputation inflicted by its dependence on government assistance.
But Akerson said a now-healthy GM is focused on the future. “Continued investments, innovation, and job creation are just some of the “returns” of a healthy GM and domestic auto industry. Our work continues uninterrupted, and we will keep our sights squarely on our customers and transforming the way we do business.”
#3
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#8
GM failed because of poor products. End of discussion. The economy, the excuse they like to use, just hastened their demise that was long fore-shadowed. They should've been allowed to fail. The doom and gloom scenarios put out by them are nothing but conjecture or short term issues. The stronger players would've taken what was valuable and become stronger. The US Government had no problem letting airlines fail post 9/11 and post deregulation, I see no reason why GM and Chrysler be treated differently.
GM will continue to be Government Motors until they pay back the $11 BILLION DOLLARS THEY OWE US.
#9
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What about all the money shareholders lost, that is what went to finance this debacle as well. The American tax payer ended up footing the bill for the entire mess one way or another.
#10
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GM failed because of poor products. End of discussion.
They should've been allowed to fail. The doom and gloom scenarios put out by them are nothing but conjecture or short term issues.
GM will continue to be Government Motors until they pay back the $11 BILLION DOLLARS THEY OWE US.
#11
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It is ONLY $11B, just sweep it under the rug and forget about this ONE failure of our government. We have shining examples of government gone right, like social security, government assistance programs, and obamacare to focus on. Overall we a country of idiots, being led by idiots.
#12
the two situations are not the same for sure, but toyota was hemorrhaging money at that time and went to their government for help (one ref: http://www.abc.net.au/news/2009-03-0...toyota/1607850).
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Toyota got cheap financing, like every company in the USA did. They were not "bailed out". Toyota certainly was at any point in danger of going out of business, lol.... they restructured quickly when the crisis hit and thats why are valued so much more than anyone else. Ford and GM are still losing money in Europe because they looked short term back in 2009.
GM got 50 billion of Govt cash so they dont close shop and US GOV ended up with 11 billion unpaid, thats without counting cost of inflation.
So lets not write ....
#13
the two situations are not the same for sure, but toyota was hemorrhaging money at that time and went to their government for help (one ref: http://www.abc.net.au/news/2009-03-0...toyota/1607850).
not even close to the end of discussion, but believe what you want. gm and the uaw certainly made endless bad or short term decisions, but there was a LOT of good things going on too. the financial housing bust and derivative investment crash though (nothing to do with GM) made car sales drop off like a rock and destroyed commercial loans, and of course chrysler was also bailed out, and only because ford had refinanced some of their debt at low rates at the right time were they able to stave off bankruptcy also.
i agree traditional bankruptcy would have been the right approach.
well that's again your opinion, the govt could have waited until (maybe) the stock became worth what was loaned, but they didn't, which isn't GM's deal. you should rail more against the govt than gm.
not even close to the end of discussion, but believe what you want. gm and the uaw certainly made endless bad or short term decisions, but there was a LOT of good things going on too. the financial housing bust and derivative investment crash though (nothing to do with GM) made car sales drop off like a rock and destroyed commercial loans, and of course chrysler was also bailed out, and only because ford had refinanced some of their debt at low rates at the right time were they able to stave off bankruptcy also.
i agree traditional bankruptcy would have been the right approach.
well that's again your opinion, the govt could have waited until (maybe) the stock became worth what was loaned, but they didn't, which isn't GM's deal. you should rail more against the govt than gm.
GM's problem go far beyond the economy. GM was losing money for almost the entire decade before the 2008 market crash. They were essentially losing money in the prior years when the auto industry was making record sales and profits. You're right that Ford mortgaged the entire company back in 2006, when the economy was strong, but GM had that same opportunity at the time as well and was advised to do so, but did not.
Even after the bailouts, GM wanted to continue their mis-managment, keep too many brands, and still was producing half-assed cars that still didn't live up to the market's expectations. They were heading downward long before any recession.
#14
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uh, thats is simply not true.
Toyota got cheap financing, like every company in the USA did. They were not "bailed out". Toyota certainly was at any point in danger of going out of business, lol.... they restructured quickly when the crisis hit and thats why are valued so much more than anyone else. Ford and GM are still losing money in Europe because they looked short term back in 2009.
GM got 50 billion of Govt cash so they dont close shop and US GOV ended up with 11 billion unpaid, thats without counting cost of inflation.
So lets not write ....
Toyota got cheap financing, like every company in the USA did. They were not "bailed out". Toyota certainly was at any point in danger of going out of business, lol.... they restructured quickly when the crisis hit and thats why are valued so much more than anyone else. Ford and GM are still losing money in Europe because they looked short term back in 2009.
GM got 50 billion of Govt cash so they dont close shop and US GOV ended up with 11 billion unpaid, thats without counting cost of inflation.
So lets not write ....
Not sure why 11 billion is causing a ruckus when Banks got 800 billion…..heck we can't even account for 20 billion to Iraq contractors…
its amazing we only lost 11 billion Also GM did seem to learn its lesson, its products and focus are greatly improved and tens of thousands of Americans, heck hundreds of thousands are still working since GM is still around.
Its easy to say "Let GM go" and not realize the consequences…the banks like to call it "to big to fail"
(and yes I changed my position)
#15
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well sorry, spwolf was incorrect. not saying toyota was at risk of bankruptcy, but they had massive losses around that time.
in feb '09 alone they lost $4.4Billion.
http://www.businessweek.com/globalbi...058_991777.htm
you guys are somehow taking this personally, but numbers don't lie. again, not saying toyota was the same as gm, but both took billions in loans. toyota's was more of a cashflow problem, while gm would have simply run out of money to operate.
i already said gm made many ludicrous mistakes and chose to be held at gunpoint by an out of control union.
how do you figure that? wasn't it right after the bailout that pontiac and saturn were ditched, and oldsmobile was earlier i believe.
anyway, you think gm still owes the govt 11bn, but that's not the deal that was made. i was very vocal about not supporting the bailout, but it happened, it's over, and it's time to move on.
in feb '09 alone they lost $4.4Billion.
http://www.businessweek.com/globalbi...058_991777.htm
you guys are somehow taking this personally, but numbers don't lie. again, not saying toyota was the same as gm, but both took billions in loans. toyota's was more of a cashflow problem, while gm would have simply run out of money to operate.
You're right that Ford mortgaged the entire company back in 2006, when the economy was strong, but GM had that same opportunity at the time as well and was advised to do so, but did not.
Even after the bailouts, GM wanted to continue their mis-managment, keep too many brands, and still was producing half-assed cars that still didn't live up to the market's expectations. They were heading downward long before any recession.
anyway, you think gm still owes the govt 11bn, but that's not the deal that was made. i was very vocal about not supporting the bailout, but it happened, it's over, and it's time to move on.