Treasury’s GM Investment Runs Out of Gas, Losses Expected
$9.7 billion — that is how much the Special Inspector General overseeing the Troubled Asset Relief Program (SIGTARP) estimates the U.S. Treasury will lose from the bailout of General Motors (NYSE: GM). The SIGTARP report, published Tuesday, has a multitude of findings about the cost and culture surrounding the bailout.
The Government Accountability Office (GAO) also issued its own statement on the financial state of the federal government’s involvement in General Motors. The GAO said $35.21 billion of the $51 billion investment had been recovered as of September 13; the government then reduced its ownership stake from 60.6 percent to 7.32 percent and plans to sell off remaining stock in GM in early 2014. As a result, the government will lose about 19 percent of its original investment in General Motors.
However, $15 billion is still owed from the GM bailout, and in order to recover the entire amount, completely erasing any debts, SIGTARP calculates that the government needs to be able to sell its stake in GM for $147.95 per share. This seems unlikely, given that would require GM stock, currently trading between $36 and $37 per share, to quadruple in value.