The General Motors’ IPO has lead to the Obama Administration declaring victory for a successful GM restructuring. GM executives echo the optimistic view of a now healthy auto company with a “fortress like” balance sheet since the infusion of over $50 billion of taxpayer money. There is still one major test left to see just how healthy GM is.
During the time of General Motors’ recent woes, the US Treasury has sunk over $17 billion of taxpayer money in to Ally Financial (previously known as GMAC) making the US government majority owner. Ally Financial has in turn assured financing for GM and Chrysler vehicle sales and dealership inventories. This taxpayer expenditure is conveniently left out when auto industry bailout costs are calculated. The proclaimed success of GM warrants the demand that taxpayers no longer remain on the hook through backdoor bailouts siphoned through Ally Financial or in the form of continued tax subsidies such as the $45 billion tax loss carryover credit that was granted by Treasury. It is past time for GM to be allowed to sink or swim on its own.
The newly elected Congress is responsible for safeguarding taxpayer money. Our growing deficit problem should take precedence over political goals. It is now up to our elected representatives to be vigilant regarding Treasury’s unprecedented use of taxpayer money to assure General Motors’ success. There is no justification for having a government owned finance company supporting GM. If GM is as healthy as they say they are, let Ally Financial do business with them as a private company. Treasury should divest its stake in Ally Financial. Enough taxpayer money and political influence have been expended on a company that should be able to prove its worth in a free market without government assistance.
Related:
CNBC: Flaherty Slams GM Aquisition of AmeriCredit
Consumers Beware: Ally Bank is GMAC