GM Bailout Will Cost U.S. Taxpayers Billions Investors.Com Posted 07:26 PM ET
Sale of the U.S. government's stake in General Motors Corp. ends a sorry saga. Not only were Americans lied to about the costs, but the bailout underscores why replacing market forces with federal bailouts doesn't work.
The Obama administration says it will unload 200 million shares — or about 40% of its holdings — back to GM right away. The rest, 300 million shares, are to be sold by March 2014.
So by dumping the stock and putting GM back in business, the federal government's "investment" was a rousing success, right? Hardly.
Remember, we were told repeatedly that GM's bailout would not only save jobs, it might even net the taxpayers a profit.
As Obama's hand-picked CEO for Government Motors, Dan Akerson, told USA Today in 2011: "I think people go, 'Wow, I'm glad we invested in GM.' I'm talking about the American taxpayer."
Well, GM on Wednesday said it will buy back the 200 million share government stake for $5.5 billion, or $27.50 a share.
The break-even point on the government's total holdings was $53 a share. But now, with $20.9 billion in taxpayer funds left to pay off from 300 million shares, the break-even point has risen to $69.72 a share.
In other words, at current prices, taxpayers are sitting with a loss of 61%, or nearly $15 billion, on their investment.
