In the private sector, this would be be grounds for a perp-walk.
But, not in government world, I guess.
The headline: GM to Buy Back Stock From Treasury
General Motors (aka. Government Motors) announced that it will purchase 200 million shares of stock held by the U.S. Treasury Department.
The auto maker will pay $5.5 billion for the shares.
The repurchase price of $27.50 a share represents a 7.9% premium over the closing price on Dec. 18.
After the repurchase, the U.S. Treasury will continue to own approximately 300 million shares of GM common stock, or approximately 19% of the outstanding shares on a fully-diluted basis.
GM expects to take a charge of approximately $400 million in the fourth quarter, which will be treated as a special item.
OK, let work through the pieces …
Even at the inflated price, since the Feds bought i at the $33 IPO taxpayers will incur a trading loss of $5.50 per share … totaling to $1.1 billion.
GM’s largesse in premium pricing the deal “saved” taxpayers about $400 million.
Keep in mind, this is hardly an arm’s length transaction.
And, we the people still own 300 million shares … representing a paper loss of another $2 billion.
Gentlemen start your engines …