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White House official: Government could get all of GM money back

Posted: 10:18 a.m. May 18, 2010

White House official:
Government could get all
of GM money back

By Justin Hyde
Free Press Washington Staff

WASHINGTON – The chief White House
economic advisor said today that the federal
government could get “most, if not all” of the
money it invested in General Motors back once
the automaker offers shares to the public later
this year.

The comment by National Economic Council
director Larry Summers goes beyond previous
estimates by the Obama auto task force that the
government would likely lose some of the
roughly $50 billion spent rescuing GM, of which
about $42 billion remains outstanding.
Summers’ comments were backed up by an
analyst estimate today that suggested the new
GM’s equity could be worth between $75 billion
and $78.5 billion – giving the government more
than $42 billion for its 60.6% stake.
The analysts with CRT Capital Group said their
numbers could be conservative if worldwide
demand for vehicles recovers faster than
Speaking at a Brookings Institute summit on
cities affected by the decline of the auto
industry, Summers noted that GM and Chrysler
were operating profitably.
“The prospects of repayment are brighter than
they were a year ago,” Summers said.
Earlier this year, the Congressional Budget Office
estimated that the government could lose as
much as $34 billion on the $85 billion spent
rescuing GM, Chrysler and GMAC, but the
estimate depended largely on the value of GM
and Chrysler’s shares.
The government also owns 9.9% of Chrysler.
Obama administration officials have said it could
take a number of years to sell off stakes in both
automakers after they issue initial public
offerings of their shares.
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