Sunday, May 31, 2009
Once General Motors files for bankruptcy on Monday, the U.S. government will step in and become the largest shareholder of the once-vaunted auto manufacturer. The Department of the Treasury will purchase a 72.5% stake in GM, and federal officials expect to invest anywhere from $30 billion to $50 billion to reshape the company. This amount is in addition to the $20 billion in taxpayer bailout money that already was given to GM to try and keep it afloat
With the new GM board of directors largely molded by Treasury and White House officials, “product decisions, plant decisions, sourcing decisions are all going to be done with a view of keeping the 72% owner happy,” said George Magliano, director of automotive research for forecaster IHS Global Insight.
Taking over the crippled car company comes with risks for the Obama administration. Whatever moves are made to make it competitive again, those changes are likely to be seen as more political rather than business-based.
The U.S. government inherits a GM that has lost more than $90 billion over the past decade, while its stock was valued at just 75 cents a share by the end of trading on Friday, having plunged from more than $42 a share in October 2007.
-Noel Brinkerhoff
U.S. Taxpayers Soon May Be General Motors' New Owners (by Kevin G. Hall, McClatchy)
General Motors Stock Price History (Google Finance)
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