Obama Touts Bailout After Reports Administration Rejected GM Offer to Cut Government Ties

September 17, 2012 - 4:24 PM
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In this July 8, 2012 file photo, the Chevrolet logo shines on a Silverado pickup truck at an auto dealership in Springfield, Ill. (AP Photo/Seth Perlman, File)

(CNSNews.com) – After reports that the Obama administration resisted General Motors effort to break ties with the federal government, President Barack Obama again heralded the auto bailout.

“When some of these other folks said we should let Detroit go bankrupt, when they said we should walk away from an industry that supports one in eight jobs in Ohio, I said we’re not going to go that way,” Obama said at a campaign rally in Cincinnati. “I bet on American workers, and three years later, the American auto industry has come roaring back with nearly 250,000 jobs.”

But the bailout hasn’t paid off well enough for the Treasury Department to sell the stock back. At GM’s Friday price of $24.14 per share, Treasury would lose about $15 billion from the bailout. For the federal government to break even on the bailout, GM would reportedly have to more than double its stock price to $53 per share.

The Wall Street Journal first reported Monday that the Treasury Department balked at an offer from GM to buy the company’s remaining 200 million of the 500 million shares held by the government. Under this GM proposal, the government would sell the rest through a public stock offering.

The paper reported, “U.S. taxpayers kept the nation's largest auto maker by sales afloat with a $50 billion bailout in 2009 and now own 26.5% of the Detroit company. But GM executives have grown increasingly frustrated with that ownership, and the stigma of being known as ‘Government Motors.’

“Executives have said the U.S.’s shadow is a drag on its reputation and hurts the company’s ability to recruit talent because of pay restrictions. Privately, executives are also irked at the continued curbs on corporate jet use,” it added.

The Journal further said, “The Treasury Department is resisting a push by General Motors Co. to sell the government's entire stake in the auto maker,” because, “A sale now would leave the government with a hefty loss on its investment.”