Quote:
Originally Posted by 8cd03gro
The Fed was not legally aloud to liquidate the remaining holdings in GM (IIRC, just about 33%) until May 22nd, two days ago. If the Fed sells it's holdings at current PPS values, $30.83 at market close today, the taxpayers would lose a hell of a lot of money and the dillutive effect of selling those shares into the float would only drive PPS way lower. The conversion into common stock was made at a valuation near $60 PPS. The IPO was made too early at too high of a PPS imho.
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I am in no way defending the bail out or how it was conducted. In fact, I would prefer for the government to stay completely out of the market. But they chose to get involved and it is done. I am just trying to explain what happened because there seems to be a lot of confusion. Like all shareholders, if the Treasury's primary concern is to turn a profit it is their responsibility to play it in a way that is most profitable. In this case that was not their motivation, their primary concern was not to make money but to save a gigantic US employer at a time when our economy was falling apart. In that respect, their investment paid off because GM is alive and well.