The US Treasury announced that it would begin another round of sales of General Motors stock, with the hope of getting rid of its remaining 17.7% stake in the company in the next 12 to 15 months. Unfortunately for US taxpayers, this means the Treasury is essentially accepting a loss of $17.51 per share.
The US government bailed out GM in late 2009 for $49.5 billion to prevent the troubled automaker from filing for bankruptcy. Some arithmetic shows that the government purchased shares at about $49.56 a pop. Since late 2010, it’s been reducing its stake in the company from a high of 60.4% to 17.7% today, according to data from ProPublica. As of today, shares of GM were trading for $32.05.
So if the Treasury sold its estimated 241.7 million remaining shares today, it would take a loss of about $5.1 billion just on its remaining stake in the company. The government may have actually turned a profit from bailing out Wall Street. The auto industry? Not so much.
Update (2:51 PM ET): A spokesman for the Treasury clarifies that the department doesn’t intend to lose $5.1 billion while it’s closing out its position if shares of General Motors rise in the next year or so. (For the sake of this reporter’s tax dollars, we hope that is the case.)
We’ve also amended the Treasury’s remaining stake in the GM with official data.
That said, the government’s chances of making back all its money on its outstanding stake in GM are slim to none. According to Pro Publica—which pegs the size of the GE bailout at $50.7 billion—$20.1 billion of the initial bailout is still outstanding. For the entire amount to be repaid, the Treasury would have to sell its remaining shares at an average price of $83.16.