Gm makes obama a billion dollar gift

Gm makes obama a billion dollar gift

To coincide with the U.S. Congressional elections, details of General Motors' IPO are leaking out. President Obama had saved the country's largest carmaker with billions in taxes – and can now point to the fact that the help has paid off.

By Daniel Schnettler

Coincidences exist: U.S. Citizens elect a new Congress, and just hours before the polls open, good news from the business community leaks to the public. The General Motors (GM) IPO will inject billions of dollars into the government's coffers. For President Barack Obama's administration, this is a welcome success story in difficult times.

Anxious question of the taxpayers

Ruling Democrats had saved GM and smaller rival Chrysler from bankruptcy during the economic crisis. The bill was paid by the citizens, who had to fork out around 50 billion dollars for the GM bailout alone. For a long time, it was unclear whether this effort was worthwhile, since many experts considered the once largest carmaker in the world to be a hopeless case.

For years, the company had bypassed the wishes of car buyers and in the end got the receipt for it. It collapsed under the burden of unsold cars and excessive debt. The German subsidiary Opel also proved to be a clog in the works. Since the relaunch a year ago, things have been improving by leaps and bounds. But the anxious question was whether the taxpayer would get his money back in full in the end.

State at the end with profit

The question is a political one, since the Obama administration must be judged not least by its economic policy. And there GM is, along with Wall Street institutions and the insurance group AIG, one of the most prominent cases of government intervention in the crisis. With the big banks – first and foremost Citigroup. Bank of America – the commitment was definitely worth it financially. Rising stock prices and high interest rates on the bailout money mean that the government will ultimately walk away from the bailout with a windfall. In the case of AIG, probably the biggest problem child, the responsible Treasury Department promised a profit only on Monday.

Up to 10.6 billion dollars with first course

Only at GM was there uncertainty. By Tuesday, news was now spreading in the U.S. Media that as early as the middle of the month, the first seven billion dollars will end up in the Treasury Department's account. In total, the IPO is expected to raise up to $10.6 billion for shareholders – including Canada and the auto union – as a first step. The rest of the money will have to come from stock sales in subsequent months.

There is no official confirmation of the figures, neither from General Motors in Detroit nor from the government in Washington. "No comment," it says when asked. Such detailed information is explosive. The dreaded financial regulator, the SEC, is keeping a watchful eye to make sure that everyone involved is playing by the rules of the stock market.

Every vote counts

But in election times, any means seems to be justified. Some two years after Obama's triumphant move into the White House, his Democrats are facing a debacle. Polls show the party is likely to lose its majority in the House of Representatives to Republicans. The previous lead in the Senate is also wobbling. Whether the good news from the economic front will now bring the hoped-for turnaround is questionable. But every vote counts.

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