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Charles Gasparino

The dirt on “Government Motors”

What Whitacre does explain is how his advice to the administration that it should accept a deal in which GM would get the government completely out of its hair by repaying all the bailout money was shot down — with little rational explanation.

In the book, he blames GM’s investment bankers, who said they were skittish because of market conditions at the time — afraid that an IPO might not raise enough to repay the government’s entire $43 billion investment.

But those bankers weren’t picked by the company, but in large part by the Obama Treasury Department. And it’s clear they didn’t view Whitacre as their client — these were some of the same fat-cat bankers who themselves got a federal bailout during the 2008 financial crisis, who’d say anything to appease their ultimate bosses in Washington.

And, as Whitacre notes, the partial IPO that the bankers allowed went well. On that day, GM didn’t just get a few additional orders for its $20.1 billion offering (then the largest IPO ever) but orders worth $86 billion — enough, he notes, that GM “could have easily repaid the government the entire $43 billion it owed, and given taxpayers a nice profit for their time and trouble on top of that.”

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…how naïve he was about what it means to run a company that’s been bailed out by the federal government, and is now regulated by the anti-business types who populate the Obama administration.

Those ‘anti-business types’ in little Bammie’s admin dragged Toyota around the block over a few fraudsters trying to get rich on the ‘sudden-acceleration’ garbage. At the same time they ran interference for Government Motors lest anyone notice smoke and flames billowing from Chevy Volts.

They aren’t ‘anti-business’, they are fascists that support those businesses that they have corrupted and attack all others.

slickwillie2001 on February 5, 2013 at 7:03 PM

Answering to the feds made it hard to pay and attract talented managers, which had “negative impact on our people, and a negative impact on our psyche as a company,” now known derisively as “Government Motors.”

I find it hard to believe that no one in GM saw this coming. ALL OF IT was predicted to happen if they went that route. Are we supposed to believe they were surprised at the outcome?

HotAirian on February 5, 2013 at 7:09 PM

He makes a fundamental mistake: if the terms of the IPO had been changed, how does he know if the same amount of money would have become available? A lot of the reason people were willing to invest is because they believed that the US Government continued to be a partner/underwriter. If GM had been spun off on its own, it would have been a lot worse bet, and fewer people would have been willing to invest.

Steven Den Beste on February 5, 2013 at 7:24 PM

Obama has no intention of giving up government control of GM. EVER. Indeed, he wants to expand to controlling other businesses.

wildcat72 on February 5, 2013 at 7:26 PM

A few points:

- GM is still in very rocky financial shape.
- Interest in the IPO was founded in the understanding that the US Treasury is the underwriter for the entire enterprise
- Barky and his Union paymasters are quite happy to own a car company. Barky gets to do all kinds of loss making Green BS with the Volt and R&D. The Unions get to delay the day of reckoning for a little longer.

GM is a sham and like him or not, Romney was 100% correct. It should have gone through a managed bankruptcy. I daresay there would still be a GM, but not the bloated semi-public monster on stilts you have today.

OBL may well be dead.
GM is assuredly a zombie.

CorporatePiggy on February 5, 2013 at 7:36 PM

And, as Whitacre notes, the partial IPO that the bankers allowed went well. On that day, GM didn’t just get a few additional orders for its $20.1 billion offering (then the largest IPO ever) but orders worth $86 billion — enough, he notes, that GM “could have easily repaid the government the entire $43 billion it owed, and given taxpayers a nice profit for their time and trouble on top of that.”

If that is true, there was no reason for the government to bail out GM and Chrysler other than to bail out the UAW.

Steve Eggleston on February 5, 2013 at 7:38 PM

They aren’t ‘anti-business’, they are fascists that support those businesses that they have corrupted and attack all others.

slickwillie2001 on February 5, 2013 at 7:03 PM

Socialist fascists, actually.

Favored businesses and industries are left alone. If the high tech and entertainment sectors were treated the way the energy (oil and coal) and health care sectors are treated, if the Dems meddled in them and demonized the profits and high end salaries in those industries the way they do others, they would not have the political support they have from those sectors. The political support from those sectors is essentially a quid pro quo for government support and for not being painted and targeted as greedy rich capitalist bastards.

The socialists have a “hands-off” policy in those areas, for now. But it won’t last because it can’t last. The socialists keep running out of other people’s money. Once they have bled one private industry dry they must move on to another.

farsighted on February 5, 2013 at 10:04 PM

GM is assuredly a zombie.

CorporatePiggy on February 5, 2013 at 7:36 PM

Exactly.

farsighted on February 5, 2013 at 10:06 PM

If that is true, there was no reason for the government to bail out GM and Chrysler other than to bail out the UAW.

Steve Eggleston on February 5, 2013 at 7:38 PM

That was the only reason for the bailout.

farsighted on February 5, 2013 at 10:07 PM

What Whitacre does explain is how his advice to the administration that it should accept a deal in which GM would get the government completely out of its hair by repaying all the bailout money was shot down — with little rational explanation.

The rational explanation is the socialists want to keep the government and the unions in control of “Government Motors”.

farsighted on February 5, 2013 at 10:20 PM