Report: Treasury resists pressure from General Motors to dump shares

The U.S. Treasury Department is reportedly resisting efforts by General Motors to exit its government bailout sooner rather than later.

A report in The Wall Street Journal on Monday said the nation’s largest automaker is eager to shake a “government motors” stigma associated with it ever since it took a bailout from U.S. taxpayers.

Treasury holds roughly 500 million shares of General Motors stock, and the Journal reported GM is urging Treasury to unload them.

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The problem is that doing so now would put leave taxpayers with a significant loss, and U.S. officials in recent weeks have said they’re unwilling to dump shares given that possibility.

Asked about the report, Treasury pointed to comments made last week by Assistant Secretary Tim Massad that downplayed the possibility of a quick sale by the government.

“Dumping the shares would never make sense. We've been very disciplined and always looking at how can we exit quickly," Massad, who oversees the winding down of the Troubled Asset Relief Program that offered loans to GM and Chrysler, said on CNBC. "But we also have to maximize taxpayer returns."

A source familiar with the Treasury Department's discussions said while the government is interested in eventually unwinding its stake in GM, no specific talks to do so are under consideration.

According to the Journal, GM suggested this summer that it buy back 200 million shares from the U.S., after which the government would unwind the rest of its investment via public stock offerings.

Based on GM's stock price on Friday, the government would end up losing roughly $15 billion if it were to sell off all its holdings in the manufacturer. Currently priced at a little under $23 a share, the government would need an increase in value to $53 a share to break even, although the Journal cited anonymous sources saying the government would consider unloading stock at a price above $30 a share.

The Obama campaign has touted the auto bailout as one of the president's crowning first-term achievements, and argues it has helped him build a lead in swing states, most notably Ohio.

The Obama administration has hailed the bailout, still reviled politically, as a financial success, as the bank portion of it has reaped nearly $21 billion in profits.

However, the portions of the program devoted to auto companies and housing relief efforts — money that was never intended to be recouped — are ultimately expected to drive the overall program into the red.

The Office of Management and Budget estimated in April that TARP will ultimately cost $68 billion, and the Congressional Budget Office expects it will cost $32 billion.

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