When Congress and the Bush and Obama administrations gave away billions of taxpayer dollars to bailout General Motors, we were promised a return on our investment. They assured us we would actually make money on the deal but a report released today by the Congressional Oversight Panel shows that we have once again been deceived.
In 2008 and 2009 when the government was giving out money hand over fist to bailout GM ($50+ billion worth), all of the experts told us it had to be done and that it truly was as good investment. Once the industry recovered we would be paid back in full and would see a return.
As recently as this past August the president told us the same thing. On CNBC he said, “We expect taxpayers will get back all the money my administration has invested in GM. Over time, that is going to be extraordinarily significant. It means we stood up this industry and you know what, we got a return.”
In November GM came out of bankruptcy and with an IPO of $33.00 per share the government sold a ton of the shares held by the American taxpayer. This was in reality a huge loss for the taxpayer. The break-even point for the taxpayers to just get their money back was $43.84.
Which government economic genius decided ‘buy high, sell low’ was the proper way to handle this? The results of their stupidity became more apparent today.
The Congressional Oversight Panel (COP) writes, “Treasury sold 40% of its stake in the company very early, when the share price was 26% lower than needed to recover taxpayers’ investment in full. “ Further, the Congressional Budget Office now estimates U.S. taxpayers will be losing $19 billion on their investment.
In an amusing twist, the COP is running a headline on their website today heralding, “Taxpayers now appear likely to recover billions more than first expected.”
Wait a minute! I thought we were assured by our leaders in Washington DC that we would see a positive return on our investment. Right?
In reality what this statement is saying is that the amount of money that taxpayers lose on this failed deal will not be quite as bad as originally thought. Gee, doesn’t that make you feel better?