STEVE INSKEEP, host:
Now, there's a good chance you missed a remarkable financial document that was released this week. It's the General Motors Prospectus.
Now the words prospectus and fascinating do not normally go together, but NPR's Adam Davidson of our Planet Money Team assures us this prospectus really is fascinating.
ADAM DAVIDSON: This does not normally happen. The U.S. government does not sell stocks in the stock market, but it's going to, two weeks from now, when the U.S. Treasury sells a third of its shares in General Motors to the public.
Right now, GM is entirely owned by a consortium of the U.S. and Canadian governments, the auto unions, and some creditors. In two weeks, it will sell shares of itself on the New York Stock Exchange in what's called an initial public offering: An IPO.
Now, normally when there's an IPO, they issue a prospectus - this big book of legalese only studied by the most zealous of investors. But since all U.S. citizens are, essentially, investors in GM now, we might as well notice a few of the strange things in the prospectus that they have issued.
So, strange element number one: The U.S. government, unlike traditional private owners, is going to sell at a loss. GM expects to sell its stock at around $27 a share, roughly half what the Treasury needs to make a profit. Partly, that�s just to get out of the business - the government does not want to own GM much longer. And partly, they hope, that by selling a third of their stock at a loss, that'll eventually encourage investors to buy more and more GM stock, raising the price, so the government can sell the other two-thirds for a profit some time down the road.
Strange Element Number Two: GM is warning investors that having the U.S. government partially own a car company might be bad for business. In its official filing, GM effectively told potential investors the government might do all sorts of things for political reasons that don't make business sense; like paying executives too little or firing executives, telling the company what kinds of cars to make and where to make them. You know, like saying hey GM, you have to make hybrids in my Congressional district.
Strange thing number three: GM's prospectus reveals this shocking fact - the company has no confidence in its own financial reports. Normally, it's angry investors or regulators or journalists who say a company produces questionable financial information. But GM says, right there in the prospectus, a year and a quarter after the U.S. government bought the company, that because of internal failures, they think any financial details they report have a decent chance of being wrong.
Now, one day, if all goes according to plan, GM will be a publicly-traded company with no federal government ownership. Until then, it will, at the very least, be some fun to keep an eye on things.
Adam Davidson, NPR News.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.