Government Watchdog Calls for GM, Ally Exit Plan
WASHINGTON — A subcommittee of the U.S. House Oversight Committee will hear testimony today from government watchdog Christy Romero, who said that the Obama administration must conjure a plan on how to sell the government’s stake in General Motors Co.
Romero — special inspector general for the corporate bailout initiative, the Troubled Asset Relief Program — offered her opinion on what is expected to be one of the highly contested issues heading into the November presidential election. While Romero disagrees with calls from the Republican-led House Oversight Committee to sell share below break-even prices, she said the Obama administration must come up with a plan for the Treasury to rid its stake in GM and Ally.
“Although that would result in taxpayers getting out of these investments more quickly, it would decrease taxpayer return,” Romero said of selling share below break-even prices. “Treasury should develop a concrete exit plan for GM and Ally.”
Romero said the U.S. Treasury would have to sell off its remaining 500 million shares at more than $52 each in order to break even on a bailout for GM, which would take years.
The Treasury has invested more than $50 million in GM, but has not sold any shares since 2010. The stock is currently trading at just above $20, down from its initial public offering price of $33 in November 2010. Taxpayers currently hold a 30 percent stake in the company.
As for Ally, previously known as GMAC, the government infused the former captive lender with $17 billion through multiple bailouts during the credit crisis and now owns more than 70 percent of the company. The former captive lender filed its intent to offer shares to the public back in March, but has since delayed plans to begin marketing its IPO.
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