Friday, October 23, 2009

Poof! Government Has Already Lost $20 Billion On GM Investment

From the Wall Street Journal's Deal Journal:
In the newspaper business, reporters are often admonished not to ” bury the lead.” That’s another way of saying don’t take too long to get to the most newsworthy point of the article.

Apparently Steve Rattner, a former New York Times reporter, veteran deal maker and Obama administration “car czar” forgot the rule when he published a first person account of his time as the auto czar in Fortune this week.

At a speech sponsored by the Brookings Institution, Rattner estimated the government’s $50 billion investment in General Motors is now worth only about $30 billion, the Washington Post reported today.

Rattner said there’s “a good chance” the United States can recover the $30 billion invested in GM by the Obama administration earlier this year. But of the other roughly $20 billion previously lent to GM in the wanning days of the Bush Administration in 2008, he said, “I don’t think we are going to see [it] again.”

Rattner is careful to draw a distinction between the $20 billion doled to GM by the Bush administration and the $30 billion the Obama White House approved earlier this year. While the Bush administration gave the money with few strings attached, the Obama administration required a management shake up, including the ouster of CEO Rick Wagoner, and had the government take a 60% stake in the company....MORE