Wednesday, April 21, 2010

GM Now Only 61% Government Owned

The headlines around Government Motors repaying the taxpayer money they were given from the federal government are very misleading. Most of them say something like "GM Repays Loan in Full". The devil of course is in the details and in the rest of the story as they say.
GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. At first the entire amount of U.S. aid was considered a loan as the government tried to keep GM from going under and pulling the fragile economy into a depression.

But during bankruptcy, the U.S. government reduced the loan portion to $6.7 billion and converted the rest to company stock, while the Canadian government held $1.4 billion in loans. Those loans were repaid Tuesday, five years ahead of schedule.

The automaker hopes to begin repaying the remaining $45.3 billion to the U.S. government and $8.1 billion to Canada via a public stock offering, perhaps later this year. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent.

The truth is GM still stands for Government Motors and just like all of the other numbers that swirl around this administration, they simply change the conditions to achieve the desired outcome. And they want to go after Goldman Sachs? Sheesh this White House has accountants only Bernie Madoff could love.

Now you know why nobody was getting excited about the story of GM paying back the money.

GM is not currently traded on the stock exchange so it will be interesting to see what their IPO price will be if they make it that far.

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