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White House holds onto GM stock despite stress

General Motors is pushing the U.S. Government to sell its leftover stock in the car maker. It claims the stigma of being "Government Motors" is weighting down its chance to be successful. But the White House is declining to sell its General Motors stock at a loss to the working class individuals. Will you be trying to sell or purchase a new or used car? If this portrays you, do yourself a favor and look at Gus Johnson Ford! Want to know find out more about Gus Johnson Ford? Click this link.

General Motors stock left from bailout


In 2009, the United States Government offered General Motors $50 billion to keep it from bankruptcy. But GM's management claims it is being hindered in the marketplace by the bailout stigma, and wants to pay off its auto loans in Michigan, so to speak. It wants the Obama Administration to sell back its leftover 26.5 percent share in the company.

If the deal were made at the current price, working class individuals would lose $15 billion because the price per share has decreased a ton. When the government bought the shares in Nov 2010, the stock was $33 per share. Now, it is $23.14 per share, which is a $9 share per stock. The U.S. Treasury Department does not want that kind of loss and is unlikely to sell at that price.

To be able to break even, the Treasury Department would have to sell its leftover shares at $53 apiece. That is likely not to happen anytime soon in this economy. The Treasury Department says it will consider letting the stock go when the selling price rises into the $30s.

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Getting consumers in

It is not a bad thing to be ranked number two in the world for best-selling car maker, and that is where GM is. It regained its title as the first one until it was taken from the company later by Toyota.

Romney as opposed to Obama

The General Motors stock loss is of no concern to Mitt Romney. If he were elected, he promised to sell off all the stock right away to get the bad debt off the books.

The Obama administration cannot afford a big blow that would come if it sold off all the stock. The election is only a couple of months away, and since the administration prides itself on saving the automotive industry successfully, it would all be broken to pieces with this sort of loss.

May not even matter that much

The Wall Street Journal quoted a General Motors spokesperson, who hinted at what might be GM's only resolution in the matter:

The Treasury will make its own decisions about their stake in the company like any other owner. Our job is to produce great cars and solid profits.

General Motors is ready to overhaul 70 percent of its lineup, and if it does that and stays aggressive in its sales, it should be able to grow and get better stock costs in no time. The working class individuals will not see a loss if the Treasury Department waits until that time to sell the stocks back to General Motors.

Sources

Forbes

Wall Street Journal

Market Watch

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