Treasury winds down TARP investments
General Motors said today it will buy back 200 million shares of GM common stock held by the U.S. Treasury, marking the first step in the Treasury Department's plan to wind down its investments in the company over the next 12 to 15 months.
Treasury currently holds 500.1 million shares of GM common stock as part of the Troubled Asset Relief Program (TARP). GM will buy the 200 million shares of GM common stock at a price of $27.50 per share. Treasury would break even in its GM investment if the company bought back the stock at $53 a share, CBS News' Rebecca Jarvis reports, though Treasury has said this was expected to be an unprofitable investments.
Treasury has disbursed $418 billion in TARP funds, and more than 90 percent of that, $381 billion, has been recovered, the department says. Earlier this month, the government announced it was selling off its final shares in AIG, making a $23 billion profit.
Also, the Treasury this week announced additional progress in winding down its bank holdings. There are about 218 banks remaining in TARP's Capital Purchase Program, at a principal value of about $8 billion, though the department says it has already made a $23 billion profit in its bank investments.
Along with GM, the other main TARP holding is in Ally Financial. The government holds 74 percent of the equity in that company.
As for the remaining 300 million in GM shares the government owns, Treasury intends to sell them through various means over the next 12 to 15 months, depending on market conditions. In 2008 and 2009, Treasury invested a total of $49.5 billion in GM as part of its attempt to rescue of the American auto industry (which also included investments in Chrysler). Including the stock buy back announced today, Treasury has so far recovered more than $28.7 billion of that GM investment.
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