The U.S. Treasury’s bailout fund has lost about $9.7 billion on its rescue of General Motors Co. and would need to sell its remaining shares in the automaker for an average of $147.95 to break even, a report to Congress said.
The Special Inspector General for the Troubled Asset Relief Program in a report issued today estimated the realized losses on all GM shares sold from November 2010 through Sept. 13, 2013, at $9.7 billion. At that point, the U.S. owned 101.3 million shares. If it sold those for yesterday’s closing price of $35.80 a share, the government would lose almost $800 million more, bringing the total loss to about $10.5 billion.
The U.S. investment in GM was the biggest piece of an industry bailout that became a centerpiece of President Barack Obama’s first term. The Treasury has said it will sell its shares by early 2014. GM Chief Executive Officer Dan Akerson has said the government may exit before this year is over.
GM rose 0.7 percent to $36.06 at the close in New York. The restructured company held its initial public offering in 2010 at $33 a share. The shares gained 25 percent this year, exceeding a 24 percent gain for the Standard & Poor’s 500 Index.
“General Motors’ energies are fully focused on designing, building and selling the world’s best vehicles,” said Heather Rosenker, a GM spokeswoman based in Washington, declining to comment directly on the report.
The government is exiting Detroit-based GM as investor confidence has risen while the company introduces 18 new or redesigned vehicles in the U.S. The product surge is transforming its lineup into one of the freshest in the industry from the one of the oldest.
A second report to Congress today, this one by the U.S. Government Accountability Office, estimated that GM’s stock price needs to reach $156 per share for Treasury to fully recoup its investment as of Sept. 16.
“The price of GM’s stock is not at the level needed for Treasury to fully recoup its investment,” the report said.
The auto rescue saved 1.14 million jobs in 2009 at automakers and companies that depend on the industry, according to the Center for Automotive Research. A collapse would have reduced personal income in the U.S. in 2009 and 2010 by $96.5 billion, costing the federal government $28.6 billion in extra jobless benefits and reduced Social Security contributions and income taxes in those years, the center said.
“The actions taken by the Obama administration to protect the broader economy by stabilizing the auto industry gave the industry a new lease on life -- both General Motors and Chrysler are now profitable and creating jobs at the fastest pace in 15 years,” Timothy Massad, assistant secretary for financial stability at the Treasury, wrote in a letter to the GAO that was included in the report.
--With assistance from Angela Greiling Keane in Washington.