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Reason Foundation

GM and Feds Phoney Baloney IPO

Adrian Moore
August 30, 2010, 6:04pm

Shikha's latest Forbes column, "Obama's 'Mission Accomplished' GM Moment," points out that the GM IPO is calculated not to protect taxpayer "investment" in the company but shore up the November prospects of Democrats:

"The company is--rightly--eager to shed the sobriquet of Government Motors. So eager in fact that its outgoing CEO Ed Whitacre launched a campaign this spring misleadingly claiming that GM had paid back its government "loan" in full after returning only $6.7 billion. But even he thinks that the IPO is a dumb idea. He apparently wanted to wait until GM could command a better share price and then have the company go fully public at once instead of in several installments as per the current plan. Whitacre expressed his misgivings at a recent Management Briefing Seminar in Michigan's Traverse City, according to Sean McAlinden of the Ann Arbor-based Center for Automotive Research. "And then 48 hours later he was gone," McAlinden says.

But Whitacre's departure won't change the risk--"a big risk in my mind," says O' Keefe's Coulter--that the IPO could turn into a PR nightmare for GM if its opening price is too low.

Even if the IPO turns out to be less of a disaster, the Obama administration's wanton disregard for both taxpayers and the company shows just how desperate it is getting to deliver some sliver of economic good news to angry voters ahead of the November elections. But its actions only bespeak of the dangers of government bailouts...."

The whole thing here.


Adrian Moore is Vice President, Policy


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