The US government announced on Monday, December 9 that it had divested the last stake it owns in the country's largest carmaker in terms of sales, drawing a line on one of the complex bailouts done at height of the global financial crisis, the Financial Times reported.
According to the report, the US Treasury lost an estimated USD 11 billion on the rescue. It recouped only USD 39 billion of the USD 50 billion it gave to General Motors when sales plunged in 2008 and the company had to undergo a managed bankruptcy in 2009.
The Financial Times, however, cited a report from Michigan University's Center for Automotive Research which said that the bailout of the carmaker was able to save 1.2 million jobs and preserved government revenue amounting to USD 39.4 billion from 2009 and 2010 alone. This was in addition to the USD 39 billion that it was able to recoup from the share sales. The report said the government revenue amount included the tax revenue that would have otherwise been lost and the additional payments in social security that the government would need to make.
According to Treasury Secretary Jack Lew, the rescue of General Motors helped prevent the occurrence of a second great depression. He said, "The president understood that inaction could have cost the broader economy more than one million jobs, billions in lost personal savings, and significantly reduced economic production. With the final sale of GM stock, this important chapter in our nation's history is now closed."
The Financial Times reported that President Barack Obama also lauded the sale. The exit comes nearly a year after the Treasury began the process of selling its holdings in GM. In December last year, the automaker bought back 40% of its outstanding stake from the government in a deal valued at USD 5.5 billion. The US Treasury then said it would divest the remaining 19% stake within a period of 12 to 15 months.
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