GM and Uncle Sam Part Ways – Feds Post a $10B Loss on Bailout

Dec. 9, 2013 4:45pm Becket Adams

The United States government has sold its remaining stock in General Motors, Treasury Secretary Jacob Lew announced Monday.

This means the government no longer owns any part of the automaker.

It also means Treasury will post a $10.5 billion loss on its $49.5 billion taxpayer-backed bailout of GM. Treasury managed to recover roughly $39 billion of its investment.

Lew acknowledged the financial loss but explained bailing out the car maker was necessary to save approximately one million jobs.

“The economic stakes were high, and President Obama understood that inaction was not an option,” Lew said. “His decision to commit additional support to GM while requiring them to fundamentally restructure their business was tough but it was right.”

President Barack Obama also hailed the sell-0ff, saying it marks an important moment in the country’s ongoing “recovery.”

“When things looked darkest for our most iconic industry, we bet on what was true: the ingenuity and resilience of the proud, hardworking men and women who make this country strong,” the president said in a statement. “Today, that bet has paid off. The American auto industry is back.”

The federal government took in about 912 million GM shares (i.e. a 60 percent stake) in exchange for bailout cash in 2008 and 2009, the Associated Press reported. Washington started selling off its shares after GM launched its initial public offering in 2010.

GM’s shares rose with Treasury’s announcement Monday. Shares peaked at around $41.17, which is the highest they’ve been since GM’s 2010 IPO:

Top GM executives, including GM’s North American President Mark Reuss, have said in the past that the government bailout and the resulting “Government Motors” moniker hurt its image with certain demographics. GM hopes today’s sell-off will help it shake its association with Washington and boost sales, especially in the pickup truck market.

GM has remained mostly profitably since emerging from bankruptcy, posting approximately $20 billion in net income on sales in North America and China. The company has also invested roughly $8.8 billion in facilities in the U.S. and claims it has brought on about 3,000 new workers.

The company is currently sitting on about $26.8 billion in cash.