I was somewhat surprised to read that General Motors is planning to sell stock sometime in the near future a little over a year from its “bankruptcy.” I used the parenthesis around bankruptcy because what the Obama Administration did for General Motors was not a typical bankruptcy. Investors were not protected or given preference as was their right;
“About $27 billion in GM bonds are held by institutions and individuals. They have been asked to give up those bonds in exchange for 10 percent ownership in the restructured company, along with the right to buy a larger stake later. The retiree health fund of the United Auto Workers, by comparison, is owed $20 billion by GM. In exchange for that claim, the retiree health trust is being asked to accept a 17.5 percent stake in the company, as well as $9 billion in notes and preferred stock.
Critics say it is unfair that the restructuring plan gives the union health trust a larger share of the new GM than the bondholders. But administration officials defend the plan.”
It seemed like two bullys (Obama and UAW) pushed to the front of the line while the other investors got scraps. Hence Government Motors was born. Fueled with two whole quarters of profits they are now planning to offer stock in the once-bankrupt company, however that may be a bumpy road;
“With the government’s involvement and the extremely unusual bankruptcy that it went through, there are a number of stakeholders who have very conflicting interests,” said Linda Killian, a portfolio manager at Connecticut-based Renaissance Capital. “They need to be very clear about what the plans are for the company and who is going to be making the decisions,” Killian said. There is uncertainty over whether investors will chance a company that lost tens of billions of dollars for previous shareholders’ savings and pensions, and, more fundamentally, whether consumers will buy and whether GM can sell shares.”
Given the recent history of Government Motors, the union owning a major share of the company, lingering high labor rates, market uncertainty, and the public shafting of previous investors, who is going to risk their money? In all 
fairness the UAW should buy billions of shares since they significantly benefited from the bailout. If you were going to invest in an automaker would you pick GM over Ford who did not take government money? Anyone privy to that list of investors should be able to sell it to all types of snake oil salesmen.
Iowa Republican Chuck Grassley has taken the role of watchdog on General Motors proceedings. I guess he is a watchdog if you call writing a letter a watchdog;
“”Hopefully, when the dust settles, the taxpayer will not have lost billions of dollars on GM. In the interest of transparency and accountability, it is essential that American taxpayers know whether they are getting a fair deal on the GM IPO and how large a financial loss they are likely to suffer.”
I hope that the sale goes well for General Motors and the the taxpayers recoup all of our money, plus costs, plus interest. I doubt that even with Grassley’s oversight in this transparent process.
What are the chance that any payments from GM will be used to reduce the deficit?
