Writing in the op-ed section of the Wall Street Journal, Ed Whitacre, the first of several former GM CEOs in recent years, said the U.S. Treasury should sell its stake in General Motors.
Whitacre, who was appointed to head the automaker when it exited bankruptcy and was known for his revolving-door management changes, writes that GM has gone from bankrupt to solvent and standing strong and he said the Troubled Asset Relief Program (TARP), which gave GM $50 billion, has been a resounding success.
Whitacre credited the courage of Presidents Bush and Obama and said millions of jobs were saved, along with the U.S. auto industry.
Now, Whitacre suggested, it’s time for the government to “step out of the way so that GM can fully focus on what it does best: ‘designing, building and selling the world’s best vehicles.’”
The government’s authority over GM came with the loans. Taxpayer-funded TARP has numerous rules about how the funds can be used. Whitacre said that as a global company, GM spends too much time on compliance, which has now become a distraction.
Whitacre was also concerned that the government doesn’t seem to be in any hurry to exit the business. When the company was preparing for its initial public offering in 2010, Whitacre wanted the Treasury to sell its entire stake immediately. If the sale fell short, GM could make up the difference, ensuring that U.S. taxpayers got repaid in full. But members of the Presidential Task Force and Wall Street bankers disagreed. The Treasury did sell off a large portion of its holdings after the IPO but still retains about 500 million shares.
While claiming no inside knowledge, Whitacre noted that published reports say GM is trying to persuade the government to sell but there is little interest at the current stock price.
“The current situation is unfair to GM,” said Whitacre, and leaves the company burdened with the nickname “Government Motors.” As long as TARP money is wrapped up in GM, Whitacre wrote, the automaker is “not the master of its own destiny….”
Mr. Whitacre believes the present situation is unfair to General Motors but he sees nothing wrong with asking the American taxpayer to take, at the current price of GM stock, a $14.1 billion shellacking.
If GM seriously wanted to be free of government oversight, it should do like Chrysler did and simply pay cash. Or offer to make up the loss on the sale of stock at current market prices. Such an offer might be very tempting, especially just before the November elections.