Tuesday, April 19, 2011

Gov't Eyeing Selling GM Stock by Summer

 The United States government spent over $25 billion bailing out General Motors and Chrysler. Ford rejected the government money and has since seen profits. GM, meanwhile, has attempted to stake its comeback on the Chevy Volt, which has seen lackluster success.

Now there is word that the federal government is looking at dumping its GM stocks. This comes after thousands of company shares were sold to the public several months ago. The word is not great for taxpayers-- as it appears that you and I will lose $11 billion on the transaction:

To break even, the U.S. Treasury would need to sell its remaining stake—about 500 million shares—at $53 apiece. GM closed off 27 cents a share at $29.97 in 4 p.m. trading Monday on the New York Stock Exchange, hitting a new low since its $33-a-share November initial public offering. 
 Furthermore, the word of the potential sell-off has hurt GM's shares on the market. The value declined as the rumor set in:

After the Wall Street Journal reported a government sale could come within the next six months, GM's shares fell by nearly 1.3 percent to end at $29.59.
The government sale would "almost certainly" mean that US taxpayers would take a loss from a politically controversial $50 billion rescue of the auto giant in 2009, according to the paper.

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