By Michael O'Brien - 06/10/09 04:19 PM EDT
The government has no timeline to divest itself of its stake in General Motors, and will probably do so steadily after the new company goes public.
Ron Bloom, one of the leaders of the auto task force, said the government will sell off its 60 percent stake in GM gradually after the company has its initial public offering (IPO).
Bloom said the government had no specific target as to how many years it would like to remain invested in GM, but said it would likely not sell out of the automaker all at once out of concern for the seismic effect of such a sell-off.
"There will be a strategy to get out: It will be to access the public markets, and sell when the time comes to be selling," Bloom said.
The former union official also insinuated that the government had little choice but to take an equity stake in GM in terms of options it had to assist the company.
Bloom said that the company could scarcely afford to issue more debt, seeing as excessive debt was key to GM's problems in the first place.
"The president did not start out with wanting to be a shareholder. But one of this company's core problems for a lot of years was that it was too highly leveraged," Bloom testified. "We were very mindful of setting up General Motors with a clean balance sheet."
Bloom, along with Director of Recovery for Auto Communities Ed Montgomery, deflected questions about the government's role in determining the company's operations.
In particular, Sen. Bob Corker (R-Tenn.) asked the two whom he could call to keep the GM plant in his own state kept open, making reference to Rep. Barney Frank's (D-Mass.) discussion with GM's CEO, which led to a delayed closure for a service and parts operation center in his district.
Bloom and Montgomery had no comment on that, with Bloom maintaining that the government is taking no role in such decisions.