Tag Archives: General Motors

GOVERNMENT MOTORS WANTS TO BE GENERAL AGAIN

The largest stockholder in General Motors is holding the company back because it wants the stock to go up. It’s the government of course.  Courtesy of Market Watch.

CHICAGO (MarketWatch) — The Treasury Department is resisting General Motors’ push for the government to sell off its stake in the auto maker, The Wall Street Journal reports. Following a $50 billion bailout in 2009, the U.S. taxpayers now own almost 27% of the company. But the newspaper said GM executives are now chafing at that, saying it hurts the company’s reputation and its ability to attract top talent due to pay restrictions. Earlier this year, GM GM -1.04% presented a plan to repurchase 200 million of the 500 million shares the U.S. holds with the balance being sold via a public offering.

But officials at the Treasury Department were not interested as selling now would lead to a multibillion dollar loss for the government, the newspaper noted.

GM RESUMES POLITICAL DONATIONS

General Motors and US Steel were once icons of America, perhaps a bit like the World Trade Towers were. They grew and prospered with the nation through the Industrial Age. We were proud of them. Then they matured, grew old and stodgy. Steel remains sturdy but Motors went into a government nursing home. Hugo Chavez expressed his delight when that happened.

Now GM is majority owned and totally controlled by the Obama administration. You cannot buy a share of stock, which traded as low as 27 cents before trading stopped. All big corporations make political donations. Whether that is a good idea or not is open to debate. Of course there will be no debate because both parties are more or less equal recipients of corporate money. Democrats do get a little more, Republicans a little less. Whether that’s because business thinks Democrats are the best at government or it’s just a matter of getting the most bang for your buck is an open question.

To the credit of the Obama administration political contributions by General Motors were suspended when they took control of the company. But now they are resuming donations and indications are they will tilt Democratic; no surprise there. With government still the majority stockholder the move is premature and therefore improper. The conflict of interest is obvious. But we don’t think it is necessarily cause for great concern. We may need to change our opinion if the pattern of giving differs widely from general practice.