Now we know the reason why the Obama administration spurned General Motors’ offers to buy back U.S. Treasury stock until after the election.
In fact, there are 13 billion reasons.
A month after Obama’s re-election — an election won in part on the Obama campaign’s boast that it saved GM and Chrysler — GM announced Wednesday that it would buy back 40 percent of Washington’s stock at just half the price needed for taxpayers to break even on their investment. That’s at least a $13 billion loss according to the Detroit News (other news outlets peg the loss at $21B when all shares are sold).
Ironically, the GM losses will not negatively impact the TARP program’s bottom line because the banks that also received TARP money have paid back their loans with profit to the taxpayers. That is, Obama’s demon Wall Street banks are covering his keister on GM losses. You can’t make this stuff up.
GM’s losses, however, do not include the billions lost in Delphi salaried workers’ pensions plans that were gutted by the White House (even as UAW Delphi pensions were made whole) and billions more lost by pensioners (Indiana teachers and firefighters among them) when Obama’s White House Task Force illegally gave preference to Democrat-donating Big Labor over secured bondholders.
Though GM has been desperate to unload federal shares for months to escape the “Government Motors” stigma, the losses would have been a nightmare for an Obama campaign that claimed its bailout was an unmitigated success. Indeed, selling the shares during the campaign would have exposed Obama (and the Obamedia’s) Big Lie that he did not let GM go bankrupt. GM’s stock price suggests that Obama’s managed Chapter 363 bankruptcy was a less efficient solution for taxpayers than Mitt Romney’s managed Chapter 11.
The share price further reflects the fact that GM continues to struggle with more efficient rivals unburdened by union contracts, government mandates forcing it to sell unprofitable green vehicles, and underfunded pension obligations.
“Almost a year and a half ago, Treasury could have sold taxpayers’ GM stake for about $30 a share. They wouldn’t. Shares are now down about 20 percent from then, resulting in an additional loss in value of about $3 billion for taxpayers,” reported the National Legal and Policy Center in scolding the White House decision last September not to sell immediately. “Treasury will continue to gamble taxpayer money on GM and continue to stay invested as they market-time their exit.”
“Unfortunately for America,” the NLPC concluded, “the gains they seek by the gamble are political rather than monetary.”