While General Motors (GM) continues to lose money, it will soon begin to pay back some of the bailout funds it received in order to stay in business.
After emerging from Chapter 11 bankruptcy early in the third quarter, GM lost $1.2 billion, including $651 million in its North American core operations, which still beat a predicted $2.1 billion loss from industry analysts. All the same, it was an improvement over the $2.5 billion loss during the same period a year ago. While sales were down 25 percent from year ago levels, they were up 21 percent from the second quarter, helped along by the Cash for Clunkers program.
GM has received $50 billion in federal bailout money, including $6.7 billion in Treasury Department loans during the bankruptcy process. The U.S. government now owns a 60.8 percent stake in GM, with the remainder owned by the United Auto Workers (UAW) Voluntary Employee Benefit Association (VEBA), a retiree benefits trust fund, along with the Canadian and Ontario governments, and bondholders.
In December, GM plans to pay $1 billion to the U.S. government, along with $192 million to the Canadian and Ontario governments. It will mark the first taxpayer return on the bailout money.
GM CEO Fritz Henderson believes that the company will be able to break even in 2010, with a public stock offering in the second half of the year. This development will be welcomed by the federal government and GM's other owners, who are eager to sell their stock in order to recoup their investments. But we don't know yet whether U.S. taxpayers will ever get back the full $50 billion that the bailout has cost.
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