GM to fed govt: So, about ready to sell those remaining shares yet?

After 2009′s federal $50 billion bailout to the Detroit-based car company, the U.S. taxpayer became the majority shareholder in General Motors — our public ownership stake has since slimmed down to about 27 percent, but even so, it seems that GM’s management is getting a bit weary of being so beholden to the federal government. Earlier this summer, the company floated a plan for the feds to sell off their remaining shares and end the taxpayers’ stake in the business, but the Treasury Department isn’t taking the bait. The WSJ reports:

GM executives have grown increasingly frustrated with that ownership, and the stigma of being known as “Government Motors.” Executives have said the U.S.’s shadow is a drag on its reputation and hurts the company’s ability to recruit talent because of pay restrictions. Privately, executives are also irked at the continued curbs on corporate jet use.

Earlier this summer, GM floated a plan with Treasury officials to repurchase 200 million of the roughly 500 million shares the U.S. holds in the auto maker, according to people familiar with the discussions. Under the plan, Treasury would sell the remaining shares through a public stock offering.

But Treasury officials aren’t interested in GM’s offer at the current price and aren’t in a rush to offload shares, according to people familiar with the matter. The biggest reason: A sale now would leave the government with a hefty loss on its investment.

In a nutshell: The federal government, even if they wanted to get rid of their (our!) remaining stake in GM, wouldn’t be able to do so at a profit, and the outlook for the future is not looking so good, either — especially because General Motors in finding that the federal government’s conditions of ownership are a major inhibitor to their company’s profitability? Oh, what a pickle! And, as it turns out, it appears that compensation limits actually aren’t a good idea, because income inequality is what spurs people to work hard, innovate, and compete. For anyone out there with a fondness for central planning, that’s a difficult pill to swallow, I’m sure.

As I said, though, even if the government wanted to…

There is also a political calculus. A deal at this time could be fraught for the Obama administration, which has maintained that the bailout saved hundreds of thousands of jobs at a critical time for the U.S. economy and was a win-win for business and taxpayers alike. Huge losses on taxpayer investment in the auto maker’s stock could tarnish the administration’s overall record in recovering crisis-era bailout money.

I wonder if GM isn’t regretting having entered into this almost Faustian bargain right about now.

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