Even though he was CEO of General Motors for a grand total of 10 months and has repeatedly self-proclaimed not to be a “car guy,” Edward Whitacre Jr. still believes that the government should sell its shares in General Motors off quickly. This isn’t the first time Whitacre has called for the government to dump its shares either. Back in 2009 when he took charge of GM, Whitacre called for the government to sell off its 61 percent stake, or 912 million shares to be exact. Currently, the government claims 26.5 percent of ownership in GM.
As long as the government has a hand in funding GM, Whitacre believes the automaker won’t be able to grow. Many automotive experts believe the ill-fated nickname “Government Motors,” which has been used by those who don’t support General Motors business decisions or its products, will continue to hurt the automaker. This is why, some speculate at least, that GM’s stock price continues to bump along in the mid-$20 range. When the government acquired its share of GM in November of 2010, it paid $33 a share. Today, the government needs to sell each share at $53 apiece to break even. Whitacre’s solution to washing the government’s hands of GM was to sell every single share on the first day the automaker went public.
The reason behind Whitacre wanting to sell of every government share in GM was so that taxpayers would be repaid in full no matter if stock prices fell short. GM didn’t listen to Whitacre but it still sold 412 million shares on the first day it went public which was good for a $23.1 billion return. Whitacre claims that no one wanted to proceed with his proposed plan simply because something that size had never been done.
Whitacre continues to believe that as long as the government has a hand in GM it will be stagnate with growth being stiffened. The Obama Administration was close to sell off the remaining shares but the low stock prices shelved that plan. The government has made it known that it will halt plans to sell any more GM stock until the presidential election has concluded in November. Republican presidential nominee Mitt Romney has said that if elected leader of the free world, he will sell off the government’s remaining shares in GM quickly.
What do you think? Should the government sell off its remaining stock in General Motors? Tell us what you think in the comment section below.
Source: The Detroit News