General Motors moved quickly to complete its buyback of 200 million shares from the US Treasury Department before year end. It is a welcome sign that the Obama Administration is finally beginning to exit taxpayers' GM stake, a move that could have been made a year and a half ago when share price was closer to $30. While some felt it was never the place of Government to gamble taxpayer money on Wall Street by market timing the exit of Treasury's GM stake, others argued that taxpayers would be better served by waiting until GM share price rose to at least over the $33 IPO price of two years ago.
Here we go again. Déjà vu all over again as General Motors spreads rumors that they are tired of being Government Motors and they are so cash rich that they offered to buy Treasury's taxpayer-funded stake in the company. In typical deceptive GM fashion, sources were not named and spokesman Jim Cain refused to confirm the rumors. This is not the first time GM played the rumor game, as I previously wrote about over a year ago.
One of the most egregious abuses of the Obama Administration's auto bailouts was the blatant favoritism evidenced in the treatment of Delphi (General Motors' parts supplier) retirees. After the Delphi bankruptcy, UAW retirees had their pensions "topped off" by General Motors, apparently with taxpayer money accessed through TARP. While the UAW retirees maintained their pension benefits, non-union, salaried retirees of Delphi lost theirs. There was no logical reason for one group to have their pensions saved while another group lost theirs, just the facts that the distributions were inequitable and the only difference between the groups was that one belonged to a powerful ally of Team Obama and the other did not.
Bloomberg reported last week that General Motors will be paying $12 million in additional bonuses to its UAW workers for meeting "quality targets." It's nice to see the holiday spirit of giving at GM. Unfortunately; US taxpayers are not faring as well as Government Motors' politically favored union members.
The Obama Administration still refuses to exit its stake in GM with Treasury serving as Money Manager for the American taxpayers. Geithner and friends continue to gamble on a market-timing strategy to "maximize" taxpayers return on its GM bailout (sorry, "investment.") So, how are they doing?
According to a USA Today report, General Motors has decided to offer a Cadillac version of the Chevy Volt called the Converj. This follows reports that the Obama Administration will continue to hold its stake in GM. That makes sense, since a decision to build a Cadillac version of the Volt could not be based on economic considerations, but political ones.
According to a WSJ report, "people familiar with the situation" said on Tuesday that the Obama Administration has put on hold its decision to sell the taxpayers' stake in General Motors. The article also states that "Treasury officials had anticipated GM's share price would increase following its public stock offering last November at $33 a share." It would seem that Treasury anticipated wrong.
The unprecedented intrusion of the executive branch of the US government into the American auto industry when the Obama Administration orchestrated the General Motors and Chrysler bankruptcy processes is now leading to unprecedented responses. Groups that were clearly discriminated against and had their rights subordinated to politically powerful unions may actually have a winnable case against our own government as lawsuits are being brought against the US Treasury Dept. and others.