GM asks for gift of Billion$, and is denied

[cthulu2016]

Today's big RW outrage is GM WANTS OUT OF GOV'T; OBAMA SAYS NO

The real story, GM wants the government to sell our 27% stake in GM back to GM at a huge loss, before GM becomes more profitable and we have a chance to recoup our investment.

CHICAGO (MarketWatch) -- The Treasury Department is resisting General Motors' push for the government to sell off its stake in the auto maker, The Wall Street Journal reports. Following a $50 billion bailout in 2009, the U.S. taxpayers now own almost 27% of the company. But the newspaper said GM executives are now chafing at that, saying it hurts the company's reputation and its ability to attract top talent due to pay restrictions. Earlier this year, GM presented a plan to repurchase 200 million of the 500 million shares the U.S. holds with the balance being sold via a public offering. But officials at the Treasury Department were not interested as selling now would lead to a multibillion dollar loss for the government, the newspaper noted

http://www.marketwatch.com/story/general-motors-pushing-us-to-sell-stake-report-2012-09-17

[bpj62]

1. Reagan and Chrysler

In 1978 Chrysler Motor Corp received a loan from the federal government that kept them from going under. By 1982 Chrysler had retooled and had created the K car line and was making a profit. Lee Iaccoca went to the feds and asked if Chrysler could pay off the loan early and avoid the additional interest and the Reagan Administration said no way. That is the talking point that needs to be shoved down any republicans throat who brings this up.

[cthulu2016]

2. Actually, I think Reagan did make that gift to Chrysler

It was a big Reagan photo OP of Iaccoca repaying the USA early, thought the payoff was costly to the US, not desirable.

[bpj62]

4. Read Iaccoca Book

I got that information straight out of Iaccoca's first book. There may have been a photo op but Chyrsler hasd to pay every penny of that loan plus all the interest back.

[hughee99]

5. I don't believe this is the case. IIRC, the government didn't loan Chrysler any money,

they simply guaranteed a loan for Chrysler. If this was the case, then the federal government wouldn't have lost any money on the deal, nor would they have had any reason to not want the loan paid off early, which I believe was paid back 6 or 7 years early.

Chrysler paid back all the money, but to a private lending institution, not the government.

[Taverner]

3. Of course, I think we should double down and by the whole damn company

[joeglow3]

6. Government is making a serious error made by novice investors

The loss is already recognized. Holding the shares does not magically prevent the loss. You should NEVER hold onto an investment in the red, waiting for it to be profitable. It is a sunk cost and the loss should be "realized" if there is some place better to invest your money.

GM buying the shares back does not magically "create" billions for GM. The money comes off the balance sheet and decreases the value of the balance sheet. However, it serves to decrease the number of shares outstanding and keeps the value of the remaining shares outstanding even.

This is investing 101.

[EC]

7. Hope they had a no early payment clause..

We shouldn't allow early payment since the loan was made for a specific amount of time allowing a specific amount of interest.

[former9thward]

9. No one is talking about a loan.

The U.S. owns shares of GM. That is not a loan, it is an ownership stake. The government could sell its shares tomorrow or hold them for as long as GM exists.

[HiPointDem]

8. GM Posts Record $7.6-Billion Profit

General Motors earned a record $7.6 billion profit last year, the highest profit in the company’s 103-year history. It sold 640,000 more cars and trucks in 2011 than it did in 2010 and took in a total of $105 billion...

In China, GM’s Buick Excelle is the most popular car on the market and one GM car or truck is sold in the country every 12 seconds...

http://abcnews.go.com/blogs/business/2012/02/gm-posts-record-7-6-billion-profit/