This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

GM's Massive Taxpayer IOU Remains

Stocks in this article: GM

DETROIT ( TheStreet) -- Anyone who skimmed the headlines about General Motors' (GM - Get Report) bailout repayment in April could be forgiven for wondering why we're still talking about it.

"GM Repays Treasury Loan in Full," said the U.S. Treasury Department's press release.

"We have repaid our government loan, in full, with interest, five years ahead of schedule," then-CEO Ed Whitacre said in a commercial , to a backdrop of empowering instrumental music.

>>GM, Ford Sales Expected to Rise

>>Chevy Volt Gets Equivalent of Up to 93 MPG

"We are encouraged that GM has repaid its debt well ahead of schedule," Treasury Secretary Tim Geithner said in a statement .

But skeptics might have noticed that GM wasn't actually repaying all of its bailout - just its debt, in technical terms. It still owed taxpayers $2.1 billion in preferred stock, along with a 60.8% equity stake that's now being cashed in.

Even seven months later - after GM raised $23.1 billion in the largest initial public offering ever - the company still owes the government a big chunk of change.

According to the most recent transaction report for the Troubled Asset Relief Program, the Treasury Department distributed $50.7 billion to General Motors; $16.3 billion to its one-time financing subsidiary, GMAC (now rebranded as Ally Financial); offered a $3.5 billion credit line to GM Supplier Receivables; and will distribute up to $1.5 billion in incentives to GMAC Mortgage to workout troubled homeowners' debt.

Taxpayers have been made whole, with interest, on just one of those components - the smallest one.

GM's supplier receivables subsidiary ended up using only $290 million of the credit line. In a restructured debt arrangement, GM paid back the borrowings, with $56.5 million in interest. It represented a 19% return on investment over less than a year.

As for the larger taxpayers' investments, the picture isn't quite as pretty as it's been painted.

The government has received $20.7 billion back from General Motors - meaning the automaker alone - through $7.1 billion in debt repayments and $13.6 billion in sales of common stock during the IPO. The Treasury now has 553.8 million shares of GM, worth $18.7 billion as of Friday's close. That leaves an $11.3 billion gap between what taxpayers shelled out to GM (the automaker) and where those loans and investments stand today.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs