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U.S. Treasury Sells Final Shares of GM Common Stock, Recoups $39 Billion
As the Troubled Asset Relief Program (TARP) continues to wind down, the U.S. Department of the Treasury today announced that it has sold all of the remaining shares of General Motors (GM) common stock.
“The President’s leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression. With the final sale of GM stock, this important chapter in our nation’s history is now closed,” said Treasury Secretary Jacob J. Lew. “The President understood that inaction could have cost the broader economy more than one million jobs, billions in lost personal savings, and significantly reduced economic production. As a result of his efforts, which built on those of the previous Administration, more than 370,000 new auto jobs have been created, and all three U.S. automakers are profitable, competitive, and growing.”
Treasury has recouped a total of $39 billion from the original GM investment. To date, Treasury has recovered a total of $432.7 billion on all TARP investments – including the sale of Treasury’s shares in AIG – compared to $421.8 billion disbursed. Treasury will continue to wind down the remaining investments in a manner that balances maximizing the taxpayer’s return on investments with the speed of our exit.
In the midst of a historic financial crisis, the Automotive Industry Financing Program (AIFP) was launched to protect the economy by preventing a significant disruption to the American automotive industry. Under the AIFP, Treasury made emergency loans to GM and Chrysler to provide a path for these companies to go through orderly restructurings and return to viability.
Under AIFP, Treasury invested a total of $51.0 billion to help stabilize and restructure GM. In November 2010, GM completed an initial public offering, which yielded $13.5 billion in net proceeds for Treasury and reduced its stake in GM to 500.1 million remaining shares of GM common stock.
In December 2012, as part of its continuing efforts to wind down TARP, Treasury announced its intent to fully exit its remaining investment in GM within the following 12-15 months, subject to market conditions. As part of that announcement, GM agreed to purchase 200 million shares of GM common stock from Treasury at $27.50 per share – a transaction that closed on December 21, 2012. In January 2013, the U.S. Department of the Treasury began the process of selling its shares into the market. On April 11, 2013, Treasury completed its first pre-arranged trading plan for the sale of its GM common stock. Under this plan, Treasury sold 58.4 million shares of GM common stock for total gross proceeds of approximately $1.6 billion. In addition, in June 2013, Treasury sold 30 million additional shares of General Motors Company (GM) common stock at $34.41 per share, in an underwritten public offering in conjunction with GM’s inclusion in the S&P 500 index. The aggregate proceeds from the sale were approximately $1.03 billion.
In August, Treasury continued its sale of GM common stock, pursuant to its second pre-arranged written trading plan initiated in May 2013.
During August, Treasury received total net proceeds of approximately $811.1 million from the sales of GM common stock.10 As of August 31, Treasury has recovered approximately $35.4 billion11 of its investment in GM through repayments, sales of stock, dividends, interest, and other income.
Following is a timeline of key events related to Treasury’s investment in GM:
On December 19, 2008, the Bush Administration announced its plans to assist the auto industry.
On December 31, 2008, General Motors received $13.4 billion in short-term financing through the Troubled Asset Relief Program.
On March 30, 2009, President Obama laid out a framework for General Motors to achieve viability that required the Company to rework its business plan, accelerate its operational restructuring and make far greater reductions in its outstanding liabilities.
On April 22, 2009, the Obama Administration provided a $2 billion working capital loan to GM.
On May 20, 2009, the Obama Administration provided an additional $4 billion working capital loan to GM as it finalized its restructuring plan.
On June 1, 2009, GM began an orderly restructuring process by filing for bankruptcy. On June 3, 2009, in conjunction with the bankruptcy filing, the Obama Administration provided a $30.1 billion Debtor-in-Possession loan. The company emerged from bankruptcy 40 days later, beginning a remarkable turnaround. At that time, Treasury restructured its investment from loans to a mix of common and preferred stock, and debt in the new GM entity.
Strange how they completely overlook, wink-wink, the fact that the guvmint lost 12 billion dollars in the GM deal, thats right 12 billion not million…. the author gives the facts in different paragraphs so the info is there, just not put into laymens terms….the elite government do-dads lost 12 billion dollars of our money then have the nerve to stand around and pat themselves on the back for a job well done.
The so-called ‘President’s leadership’ is non-existent.