GM Paints Silver Lining on Cloudy Earnings Report
Nicolas Loris /
Not very often is losing $1.2 billion good news but that’s the way General Motors is spinning its third quarter earnings report. GM claims its finances are stable enough to begin repaying the $6.7 billion in government loans as soon as December and could be paid off ahead of schedule, potentially by June of 2010.
But that’s a small share of what the government (aka the taxpayer) invested in GM. Americans unwillingly invested over $80 billion in auto industry, allowing the government to take a 61 percent stake and a 10 percent stake in GM and Chrysler, respectively. On November 2, the Government Accountability Office (GAO) released a study cautioning that the Treasury will not recover much of the money invested in the automakers unless the companies’ values “grow substantially above what they have been in the past.” According to auto czar Steve Rattner, of the $50 billion invested in GM, $20 billion has already been lost for good. At a recent speech at the Brookings Institution, he said bluntly, “I don’t think we’re going to see [it] again.” Although it is difficult to assess the long-term viability of GM, it is clear much of the taxpayer-funded stock will be lost.