Government Gets Out of General Motors With Loss of $10.5 Billion
It’s Government Motors no more.
The U.S. government in December sold its last shares of General Motors Company, ending the multi-billion dollar bailout of the automaker and costing taxpayers a net loss of approximately $10.5 billion.
“This important chapter in our nation’s history is now closed,” Treasury Secretary Jack Lew said in a statement.
“It’s been a long, hard road with the label of Government Motors,” Mark L. Reuss, the president of G.M.’s North American division, told the New York Times.
$49.5 Billion Infusion
The government poured $49.5 billion into General Motors during the financial crisis that hit in late 2007. General Motors briefly entered bankruptcy in 2009. The government recouped approximately $39 billion.
The government also handed Chrysler more than $8 billion to rescue that company. Chrysler is now a part of Italian automaker Fiat. The Chrysler bailout cost taxpayers a net $1.9 billion loss.
The only major U.S. automaker that did not take rescue money from the government was Ford Motor Company.
Report: 1.2 Million Jobs Saved
The Michigan-based Center for Automotive Research in December also released a report estimating the rescue of GM saved nearly 1.2 million jobs and more than $39 billion in government transfer payments and taxes that would have been lost.
Car and truck sales in the U.S. were strong in 2013 year, with most automakers – foreign and domestic – doing well. GM recorded a profit of $4.3 billion for the first nine months of 2013, mostly as a result of sales of big cars and trucks.
Much Unknown About Bailout’s Effects
When the Obama administration in 2012 announced its intention to sell the last of its GM shares over the coming year, John Berlau of the Competitive Enterprise Institute wrote, “There is nothing new or remarkable about businesses showing signs of improvement thanks to massive infusions of public dollars. We will never know how many small businesses may have survived, expanded or moved into more profitable lines of business had the government pursued a more pro-growth alternative to this massive government bailout. We hear a lot about jobs allegedly ‘saved or created’ by this bailout. But in reality, we will never know how much farther along the road to recovery we might be if we had foregone this ‘investment’ and lowered tax rates so entrepreneurs could invest, grow and hire.”
General Motors also made news in December with the announcement that Mary Barra would be the company’s next chief executive officer. Barra started with GM 30 years ago as an engineer and becomes the first female CEO in the company’s history.