The TARP Congressional Oversight Panel announced Tuesday that “New GM” will have to achieve “highly optimistic” market performance if the Federal government is to have even a chance of recovering the roughly $67 billion that it loaned to the troubled automaker this year. The oversight panel also recommended that the government should place its shares of GM and Chrysler into an independent trust in order to reduce the appearance of “political pressure and government interference.”
For GM, repayment of TARP would require government shares of the new GM to be worth $40.7 billion, assuming other debt is repaid. That means the market cap of the entire company would need to be $67.7 billion, the report said.
In April 2008, when old GM shares were at their highest, the company’s total value was $57.2 billion, the panel said. The figure is not adjusted for inflation.
“New GM will have to achieve a capitalization that is higher than was ever achieved by Old GM if taxpayers are to break even,” according to the report.
But if you buy a Government General Motors vehicle between now and November 30, you’ll get a money-back guarantee from the company. *sigh*
And while we’re on the subject, guess what else GM will probably never be paying for:
Among those clamoring for attention and payouts from Motors Liquidation Co., the company that assumed General Motors’ unwanted assets after its Chapter 11 filing, are the environmental and economic redevelopment departments of state governments.
Before bankruptcy, GM estimated it had $1.9 billion in environmental issues and litigation liabilites. Motors Liquidation Co., though, has only about $1.2 billion to manage the entire wind-down of its affairs — and as one might expect, attorneys handling the matter are expected to get a huge chunk of that. The figure to clean up sites in places like Buick City (pictured, before the buildings were demolished), Michigan and Massena, New York has been pegged at $530 million. However, the way it’s looking, there won’t be anywhere near that much money to get the job done.
The affected areas are afraid they will have to pay for the clean ups or simply let the land go unused. The problem with that: those local governments don’t have the money. And they can’t expect a developer to spend millions to clean up an old mess. If not Motors Liquidation or GM, civic representatives want the government to foot the bill since the current administration orchestrated the deal. (emphasis added)
Your tax dollars at work, folks.
(Original post amended to include the money back guarantee story.)
