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Auto bail-out in White House fray

2012-02-17 06:55

WASHINGTON - Republican presidential candidate Mitt Romney has called on the US government to sell its stake in General Motors, a move that could lock in about $14-billion (R110bn) of losses for US taxpayers.

Romney, in an opinion piece in The Detroit News, criticised Democrat president Barack Obama's $81-billion auto bail-out in 2009 as "crony capitalism" that rewarded unions and other political allies of the president.

Romney was trying to explain why, in 2008, he called for the US government to stand aside as auto companies at the brink of insolvency begged for help.

The industry plays a dominant role in Michigan's economy and auto industry analysts say the government-led reorganisation of GM and Chrysler helped saved more than a million jobs and led to the rebirth of the two companies.

SELL RESPONSIBLY

Obama, though, is highlighting the industry's turnaround as a success story in his efforts to create jobs in a devastated economy.

Romney, son of a former auto executive, says the automakers would have recovered on their own. "The Obama administration needs to act now to divest itself of its ownership position in GM. The shares need to be sold in a responsible fashion and the proceeds turned over to the nation's taxpayers."

Taxpayers have recovered roughly half of the government's $49.5-billion investment in GM through stock sales and loan repayments. To break even on the GM bail-out, the Treasury Department would have to sell its remaining one-third stake in the company for roughly $53 (R417) a share. GM stock is trading at about half that amount so taxpayers would lose about $14-billion (R110bn) if the stock was sold today.

Reuters

Comments
  • Grant - 2012-02-17 13:05

    Romney is an idiot, and clearly knows nothing about investment. The only part of the US elections that I enjoy is seeing which idiot the Republicans pick to represent them. Kinda like the Idols auditions.

      Sean - 2012-02-17 13:30

      As long as they pick someone who can push socialist Obama out of the white house. Obama and the Democrats clearly know nothing about debt. They seem to think it is fine to bury the country in debt so that they can give freebies to lazy americans to ensure their re-election. Kind of exactly like what the ANC does in SA to keep their voters happy and obligated to vote for the useless ANC election after election. Margeret thatcher was 100% correct when she said:" The problem with socialism is that sooner or later you run out of other peoples money." Obama just does not seem to grasp the fact that he cannot spend his grandchildrens tax money now.

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