Wednesday, December 26, 2012

EDITORIAL: Government recalls GM stock (Good read)

The Washington Times ^ | December 26, 2012 | Editorial

Administration puts an expensive end to a disgraceful episode

General Motors will no longer be “Government Motors.” The Treasury Department on Wednesday announced its intention to liquidate federal holdings in the automobile company over the next 15 months. The final tally will show this policy has been a disaster for taxpayers.

Under the best case scenario, the public will wind up shelling out more than $13 billion by the close of this unfortunate episode. Though President Obama has portrayed the GM bailout as saving Detroit, it was really a reward for the auto unions. It was a celebration of bad management that steamrolled the rights of creditors. It was precisely the sort of thing that ought never happen in an economy based on free exchange.

In the aftermath of the financial meltdown four years ago, Congress created the Troubled Asset Relief Program (TARP) to bail out several of the big-name Wall Street firms. Uncle Sam created a similar program to funnel almost $50 billion to “save” GM. This allowed GM to bypass much of the traditional bankruptcy process, which is designed to permit a struggling business to reorganize in an orderly fashion. Avoiding bankruptcy preserved the lavish union contracts largely responsible for sending the company over the edge in the first place. As part of the bailout deal, Uncle Sam grabbed a 60 percent ownership stake in GM...

(Excerpt) Read more at washingtontimes.com ...

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