STEVE INSKEEP, host:
One year ago this week, the U.S. government bailed out some of the country's largest banks. The government has actually made some money off of that, about $10 billion so far. The situation is less clear, though, when you look at the auto bailout. Our Planet Money team has been checking in on our investment in General Motors.
David Kestenbaum has the story.
DAVID KESTENBAUM: In case you've lost track, U.S. taxpayers have put a total of $50 billion into General Motors. Initially, the aid was supposed to just help GM weather the storm, but, as we all know, the storm won, and General Motors went through bankruptcy. The new GM CEO Fritz Henderson recently sat down with my colleague Adam Davidson and ran through the company's financials.
Mr. FRITZ HENDERSON (CEO, General Motors): We talked about debt preferred in common. Okay?
ADAM DAVIDSON: You're writing that down for radio listeners.
Mr. HENDERSON: Sorry, this helps me think about it. So, the debt to the U.S. and the Canadian government is about $8 billion. And it's six-seven and one-three.
KESTENBAUM: What Henderson is saying there is that as a result of the bankruptcy restructuring, General Motors only owes the U.S. government $6.7 billion. Now, that does mean that the rest of the $50 billion the U.S. invested is gone, because guess who owns 61 percent of this brand new General Motors company? We do, the taxpayers. That's what we got out of the bankruptcy.
So, the question is: What is that stock worth? Or, more importantly, what will it be worth? The stock isn't traded publicly yet, so there's no easy way to put a price on it.
Henderson says business is looking okay. September sales were abysmal compared a year ago, he says, but people still bought GM vehicles. The company captured one-fifth of the U.S. market.
Mr. HENDERSON: In an absolute sense, we weren't particularly happy given how weak the industry was, but our share performance was actually the best we had this year. And, you know, and I'd say so far October has shaped up okay, too. So, you know, good initial encouraging signs.
KESTENBAUM: By all accounts, General Motors was a mess before the bankruptcy. Steven Rattner, who led the U.S. auto taskforce, describes his experience in the current issue of Fortune magazine.
Rattner writes, quote, "Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found. The top brass," he wrote, "were sequestered on the uppermost floor behind locked and guarded doors with elevator cars that would take them directly to their private garage."
So, will the taxpayers get their money back? John Casesa with the Casesa Shapiro Group says maybe. Casesa is a long-time auto analyst.
Mr. JOHN CASESA (Auto Analyst, Casesa Shapiro Group): GM would have to have a very impressive turnaround, and, you know, start to earn a lot of money -seven, eight, $10 billion a year.
KESTENBAUM: Recently, General Motors has been losing billions. Still, Casesa says, the company is in a much better financial situation now after bankruptcy, and he expects the car market will come back.
Mr. CASESA: Sales are running at an extremely, extremely low rate, and I am well aware of all the reasons why the economy may be weak for some period of time. But if sales were to bounce just to 13 or 14 million, which is still well below the historical sales level, they could start to make a lot of money.
KESTENBAUM: Here are some sobering numbers, though: At its peak, if you took all of General Motor's stock and added it up, the company was worth $57 billion. Remember, taxpayers now own a little over half the company, so if we want all our money back, General Motors will have to be worth even more than it was in those happier days.
Jeremy Anwyl is CEO of Edmunds.com, which analyzes the auto industry, and he basically agrees with Casesa's analysis: it'll be hard for taxpayers to be made whole. But if you ask him was the bailout a bad idea, he says it's hard to know.
Mr. JEREMY ANWYL (CEO, Edmunds.com): I mean, I'm of two minds, 'cause on the one hand, you know, I'm kind of old school. I'm not sure if government should be investing in business like this. On the other hand, I think the consequences here would've been pretty dire, so sometimes you just kind of hold your nose and do the right thing, even though, you know, in principle, it's probably something we shouldn't have done.
KESTENBAUM: It's possible, he says, doing nothing might have been worse.
David Kestenbaum, NPR News.
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