This Day On The Street
Continue to site
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

At What Cost Did the U.S. Government Rescue GM?

NEW YORK (TheStreet) -- With General Motors (GM - Get Report) set to release first-quarter 2014 results Thursday morning, it's time to ask whether GM was really saved by the Obama administration starting in 2009.

One must ask whether instead it merely won an expensive reprieve from the negative, forestalled effects of the restructuring of the global automotive industry.

Moreover, did unprecedented moves favoring GM inside the U.S. vs. other competitors end up compromising efforts to foster fair competition in key markets worldwide, while casting a pall over the integrity of U.S. capital markets?

Examining GM Performance vs. 2009 Base Case Projections

When professionals evaluate the success or failure of restructuring efforts such as those attempted with GM, they generally compare actual performance with estimates made at the time a given company was transformed.

The emergence of New GM from the bankrupt husk of Old GM occurred in a remarkably short period of 40 days between June 1, 2009 and July 10, 2009.

Unless they are buried in a filing I have not found, base-case financial and operating projections for New GM from July 10, 2009 forward have not been exposed to public scrutiny.

These projections, admittedly cobbled together in haste and under great pressure, are certainly material to any informed assessment of whether government efforts with GM succeeded.

Given passage of time and events, releasing information contained in the original projections cannot possibly harm New GM from a competitive standpoint. However, doing so would certainly set a proper context for judging the GM rescue attempt.

Taxpayers deserve to know what returns government leaders bargained for as they pieced together the opening capital structure of New GM.

Union members and retirees ought to know what their representatives traded for as they altered contract terms and work arrangements in exchange for ownership interests in New GM securities.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
GM $35.01 0.00%
AAPL $126.88 0.86%
FB $77.56 0.00%
GOOG $530.80 0.00%
TSLA $234.45 0.64%

Markets

DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs