The U.S. government is looking to get out of the auto business, but an insider has revealed that GM's dipping stock price is keeping them in the game longer than they would prefer.
Leftlane reported less than a week ago that members of the Obama administration had updated their estimated potential losses for the auto bailout to fall in the realm of $14 billion - with the biggest factor in that estimation being the selling price of General Motors stock.
The U.S. Treasury still holds 500 million shares of the automaker, which means even a few pennies fluctuation in the stock price could result in a sizable loss or gain. Currently, GM stock is down almost $5, or nearly 15 percent from its initial public offering price, something that is apparently putting the government in a holding pattern, according to sources speaking with Bloomberg.
One possible move that could help the Treasury out of the bind would be a buy-back action by GM, which is sitting on a little over $30 billion in cash. The issue resides in the fact that the Treasury is hesitant to sell even to GM at the current price given the potential for political fallout from incurring losses to the taxpayers.
For now, insiders say the Treasury plans to hold tight with hopes of waiting until the stock at least returns to the $33 IPO pricing.
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