Treasury Optimistic About GM Share Price
DETROIT — The recent surge in General Motors Co.'s stock price bodes well for the company's goal to cut ties with the U.S. government, said Ron Bloom, U.S. Treasury's point person on GM.
Mr. Bloom said in an interview Tuesday that the Obama administration is pleased with the auto maker's share performance and "serious" about selling the remainder of its stake in the company.
GM and its stock underwriters are increasingly optimistic that the Treasury will sell most or all of its remaining stake next year, rather than offloading shares gradually over the next few years, reported The Wall Street Journal. The U.S. Treasury reduced its GM stake to 26.5 percent from 61 percent in November's $23.1 billion GM initial public stock offering.
"At some point we are going to sell the remainder of our shares, so [the stock price increase] is a good thing," Mr. Bloom said. "The size of the initial IPO ought to give people some indication that we are serious about exiting as soon as practicable."
Before the IPO, GM Chief Executive Daniel Akerson said he had expected the Treasury could take several years to sell its stake.
Banks underwriting the stock sale and GM executives would prefer to see the government cut ties with GM more quickly, according to people familiar with the matter. GM's government ties, while dramatically reduced from a year ago, remain a turnoff to some potential investors and customers, they worry. Chrysler Group LLC, also a bailout recipient part-owned by the government, has echoed that sentiment.
Mr. Bloom said the Treasury will balance its desire to exit from GM with an obligation to recoup as much as possible of the government's $50 billion bailout of GM. He said too much uncertainty remains around GM's performance and the health of the overall auto market to know whether the Treasury could meet its objectives with major stock sale in 2011.
"If the stock price goes down, we would then be reporting a larger loss [on the government stake] and that would be an issue which we would have to take into account," Mr. Bloom said. "Investing in private companies is best done by private investors and getting out has a broad benefit for the financial markets. We are of course also mindful of our commitment to taxpayers."
The Treasury needs to sell it remaining GM shares at an average price of $53 each to break even on the bailout. GM shares were trading at $38.91 at midafternoon Tuesday, compared with the $33 IPO price.
Mr. Bloom declined to comment on his future in the Obama administration. He has been in the running for a new position overseeing the White House's manufacturing policy.
More Industry

Nebraska Rooftop Changes Hands
The Gregg Young Automotive Group has sold its second dealership to Janssen Auto Group, both in Plattsmouth, Neb.
Read More →
Penske Auto Group Deal a Record
The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.
Read More →
War Toll a Damper on Used Auto Prices
Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.
Read More →
Bridge the Maintenance Gap
With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.
Read More →
California Store Has New Owner
The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.
Read More →
BMW Plant Pursues Cleaner Energy
BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.
Read More →
Auto Affordability Inches Up
The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.
Read More →
Ohio Auto Group Under New Ownership
After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.
Read More →
RV Group Expands Carolina Footprint
Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.
Read More →
Agent Acumen
An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.
Read More →