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General Motors Company (NYSE:GM): Should The Company Pay $10 Billion?

Boston, MA 12/18/2013 (wallstreetpr) – General Motors Company (NYSE:GM) bail out have cost about $10 billion to the government, but the Chief Executive Officer of the company, Dan Akerson has rejected any suggestion of company compensating for the losses. According to him, Treasury officials took the same risk, so it was assumed by anyone who buys stock. He further said that he will not accept that it was a bad deal. He said this at the National Press Club in Washington. Also, he said that the government’s help of $49.5 billion to the company has saved billions of dollars in government social services and tax revenue.

Last week in the Treasury announcement, Akerson spoke that he has sold his last shares in the company and also he is going to retire in January.  Mary Barra, the first woman CEO of the company will replace Akerson.

Investment

The company also announced that it is going to invest $1.2-billion in 5 plants of United States to which Akerson replied that the company cannot rest on its success after 15 straight profitable quarters. He said that they are in a capital-intensive business where significant and steady investment is required.

About The Debt

The current CEO said that the company repaid all the debt that was issued by the government in December 2008. This was the time when George W. Bush was still the President and Barack Obama was going to take over the presidency. He said that it was the decision of Treasury to take an ownership stake in company shares’ form.

When Mr. Akerson was asked whether the company should pay the difference in the amount that returned from the sale of the shares and the money the government provided to the company, he said that Treasury casted a dice when it decided to take shares. If the company compensates for losses, other shareholders may file a lawsuit against them. Those investors expect the company to pay dividend. He also said that this deal saved millions of jobs so it had a positive effect on the economy of United States.

Published by Chris Brown

About Me: I have a Phd in Economics Gender: Male Interests: Playing games like cricket, volleyball Favorite Music: hip hop, rock, jazz



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