General Motors Ends Government Bailout, Announces First Female CEO
It's turning into an historic week for General Motors (NYSE: GM) – as the nation's largest automaker ended its controversial government bailout, and has named its first female CEO.
On Monday, the U.S. Treasury announced it had sold all of its remaining shares in GM common stock, as the goverment's TARP (Troubled Asset Relief Program) winds down.
“With the final sale of GM stock, this important chapter in our nation’s history is now closed,” Treasury Secretary Jacob Lew said in a press statement. “The President understood that inaction could have cost the broader economy more than one million jobs, billions in lost personal savings, and significantly reduced economic production. As a result of his efforts, which built on those of the previous Administration, more than 370,000 new auto jobs have been created, and all three U.S. automakers are profitable, competitive, and growing.”
The Treasury Department said it recouped a total of $39 billion from the original GM investment, reportedly a loss of about $10 billion in taxpayer money; part of a set of emergency loans begun under the Bush Administration in 2008 to keep both GM and Chrysler – a division of Fiat (OTC: FIATY) – from going under. Ford (NYSE: F) made it throught the recession on its own, without federal aid.
GM officials are happy to finally put to rest the stigma of the government bailout.
“It’s been a long, hard road with the label of Government Motors,” Mark L. Reuss, the president of G.M.’s North American division, told the New York Times before the announcement.
Analysts, meanwhile, said the intervention by the Bush and Obama Administrations not only kept the U.S. auto industry from collapsing, but kept the national economy from sliding into an even deeper crisis.
“It had to be done because the entire industry was in a depression, and it could have dragged the whole country into one,” David E. Cole, the former chairman of the Center for Automotive Research in Ann Arbor, Michigan, said in an interview with the Times.
And just hours following word of the GM stock sale, the company's board named Mary Barra as its next chief financial officer.
Barra, 51, reportedly started with GM as an engineering co-op student in the early 1980s. She's currently the company's senior vice president for global product development – and had previously headed GM's human resources operations. A company press statment says she will also join the GM Board.
“With an amazing portfolio of cars and trucks and the strongest financial performance in our recent history, this is an exciting time at today’s GM,” Barra said in the press statement. “I’m honored to lead the best team in the business and to keep our momentum at full speed.”
And some industry analysts are applauding GM's decision.
“GM is in more than capable hands as we’ve seen some of the best products released under Mary Barra, who has helped to oversee the development of their vehicles on a global scale, said Jared Rowe, President of Kelley Blue Book.
"Now that the company has also been freed from government ownership," he added, "Mary has the opportunity to see the company continue to develop vehicles that consumers want to drive while improving its continued profitability.”
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