Earlier today, General Motors announced that the company paid $4.7 billion to the U.S. government and $1.1 billion to the Canadian government, fulfilling its obligation agreed to when it received its initial bailout funds. In total, GM received $52 billion from the U.S. government, but only $6.7 billion of this amount was considered a loan. The company already paid back $2 billion, so this $4.7 billion is the last payment.
This doesn’t mean that “Government Motors” is no more. Despite the payback, the government still owns a controlling portion of the restructured GM. The United States will eventually relinquish its ownership, but this will take some time. Even when the new GM completes its initial public offering, the U.S. government will still be an owner for some time.
The CEO of the new GM, Ed Whitacre, wrote an opinion piece for the Wall Street Journal praising his company and its success since bankruptcy, including a feeling of “renewed energy and commitment” and advertisements for more fuel-efficient vehicles, despite losing $4.3 billion in the second half of 2009.
The auto industry may not have fully recovered, but we now be able to realistically consider the auto industry bailout in general. We still may not know exactly what would have happened if the auto industry was allowed to implode, but it would have probably involved significant unemployment and a major redefinition of the global auto industry.
Has temporary government intervention proven to be helpful, or even industry-saving, to General Motors and the other companies receiving public assistance? Should the market have been allowed to reshape itself?