GM reports its first annual profit since 2004.
After last November’s successful initial public offering of General Motors stock there were signs the White House might wait to sell off the remaining government-owned shares hoping to maximize the Treasury’s return. But a senior Obama Administration official says the goal is to get out of GM as quickly as possible, even if that means selling at a loss.
“The writing is clearly on the wall that the government is getting out of the GM position,” says Austin Goolsbe, chairman of the Council of Economic Advisors. “The government never wanted to be in the business of being majority shareholder of GM. It was only to prevent a wider spillover, negative event on the economy. So we’re trying to get out of that.”
Starting with former President George W. Bush, the government has invested $49.5 billion in keeping GM alive – and billions more to bail out Chrysler. That got taxpayers a 60.1% stake in the bigger maker, though that dropped to 33% as a result of what is generally seen as a very successful GM IPO, last year.
The maker originally was looking at an initial “strike price” of as little as $26 a share but ultimately came to market at $33. GM stock has since nudged the $40 mark – with some analysts predicting it could hit $50 a share – though it has taken some hits, in recent days, as fuel prices have soared in the wake of the crisis in Libya.
If the Treasury were to sell off its remaining stake, government analysts have estimated it would wind up with a $10 billion loss on the GM bailout.
While Goolsbee suggested “market timing” will not be used to determine when the remaining 33% stake is unloaded, others have urged the Obama administration to hang tight, notably including former White House “car czar” Steve Rattner.
A quick sell off, however, appears to have the support of GM management, including CEO Dan Akerson, who want to shed the derisive nickname, “Government Motors,” as quickly as possible.
During a breakfast meeting in Washington, the CEA chairman said he was “extremely happy” with the pace of the U.S. auto industry’s recovery. In fact, it appears to have taken Goolsbe by surprise. He was reported to be strongly opposed to giving money to Chrysler during the 2009 auto bailouts, but was eventually overruled.
GM reported $4.7 billion in earnings for 2010, its first annual profit since 2004. (Click Here for the full story.) Chrysler had a net loss for the year but CEO Sergio Marchionne is predicting it will be back in the black for 2011.