Grassley: Treasury Needs Plan to Recoup GM Investment

M E M O R A N D U M

To:        Reporters and Editors
Re:       GM stock initial public offering
Da:       Wednesday, November 03, 2010

Sen. Chuck Grassley made the following comment on the terms of GM’s initial public offering of stock that were made public today.  Grassley is concerned about whether the taxpayers will be repaid for rescuing the automaker.

“The inspector general confirmed for me weeks ago that the GM initial public offering would need to clear a high bar to repay taxpayers.  The inspector general said GM stock would need to sell for an average of $133.78 a share to fully recoup the tax dollars spent to rescue the automaker.   The highest share price the former GM ever reached was $94.63 in 2000.  Today’s filing says at least 365 million shares will be offered at a projected $26 to $29 each.  Short of a miracle, the initial public offering won’t repay the taxpayers.  The onus is on the Treasury Department to come up with a plan to make sure taxpayers get their money in full.”

A press release describing what Grassley learned from the inspector general follows.

For Immediate Release
Wednesday, September 22, 2010

Grassley Finds Out What’s Needed to Make Taxpayers Whole in GM Bailout

WASHINGTON – Continuing to look out for taxpayers in the bailout of General Motors, Senator Chuck Grassley has secured an official determination that the U.S. government needs to sell all its stock in GM at an average price of $133.78 a share to fully recoup the tax dollars spent to rescue the automaker.

The highest share price the former GM ever reached was $94.63 in 2000.

The latest assessment comes from Neil Barofsky, the Special Inspector General for TARP, in response to a request from Grassley last month.  Grassley worked to establish and empower this inspector general in order to hold the government accountable for the use of bailout dollars.

“I didn’t support the government bailout of the automakers, and I’ll continue to work to see taxpayers repaid and to hold the Treasury Department accountable for the sale of the taxpayers’ share of GM,” Grassley said.

Earlier this year, the Iowa senator exposed the misleading claim by the Treasury Department and GM that the car company had “paid back” its $6.7 billion taxpayer-funded loan “in full, with interest, ahead of schedule.  In fact, the loan had been repaid by another taxpayer account.  Because most of the government’s emergency loan to GM was converted to shares of stock during bankruptcy, that money can only be recovered if the government can sell its shares of GM at significantly higher prices than it is currently estimated to be worth.

• Print
• Email
• Tweet