Question

What did the US Government do for GM in regards to their bailout in 2008 that has never before been done to bondholders? Look into their union, wages, financial arm, before and after the 2008 financial crisis and GMs bailout?

Answer 1

General Motors -Detroit based automaker, was worst hit by the depression of 2008 with the car sales steadily falling down. GM was loosing billions & running out of cash. In end of 2008, the GM books of account was left with US$30.9 billion. Then CEO sought the government funding to save the industry & keep GM out of Bankruptsy.

As a result of the company’s 2009 bankruptcy, the government’s equity investment was converted to a 61 percent equity stake in GM, plus preferred shares and a loan. The Obama government's (held a 61% stake) decision to sell the last of its General Motors shares is due to following significant process after the company declared Bankrupt in 2009 :

Dec. 19, 2008. The Bush Administration announces plans to bail out Detroit's auto industry, notably General Motors

Dec. 31, 2008. GM receives $13.4 billion in short-term financing through the Troubled Asset Relief Program

April 22, 2009. The Obama Administration provided $2 billion working capital loan to GM with a supplement of  $4 billion

June 1, 2009. GM files for bankruptcy reorganization. In bankruptcy, it cuts costs and sheds such well-known brands as Saturn, Hummer and Saab.

June 3, 2009, in conjunction with the bankruptcy filing, the Obama Administration provides a $30.1 billion debtor-in-possession loan.

June 8, 2009. GM kicked off the list of 30 companies comprising the Dow Jones Industrial Average.

July 10, 2009. GM exits bankruptcy.

April 20, 2010. GM makes its final loan repayment. Government holds a 61% stake in common and preferred stock.

Nov. 18, 2010. General Motors becomes a public company again. U.S. Treasury reaps $13.5 billion in conjunction with the new company's IPO, reducing its stake to 33%.

Dec. 15, 2010. GM repurchases all of Treasury's preferred stock

Dec. 21, 2012. GM repurchases 200 million shares of common stock from Treasury, which announces

it will sell all of its GM shares over up to 15 months on the open market.

Dec. 9, 2013. The last of four stock sales is completed. The government has no remaining GM shares

The goal of Treasury’s investment in GM was never to make a profit, but to help save the American auto industry, and by any measure that effort was successful,”

The U.S. bailout of GM and Chrysler, which received about $12.5 billion, saved 1.5 million jobs in the United States according to centre for automative research