Economist: Obama Owed an Apology on GM

The Economist editorial:

AMERICANS expect much from their president, but they do not think he should run car companies. Fortunately, Barack Obama agrees. This week the American government moved closer to getting rid of its stake in General Motors (GM) when the recently ex-bankrupt firm filed to offer its shares once more to the public (see article).

Once a symbol of American prosperity, GM collapsed into the government’s arms last summer. Years of poor management and grabby unions had left it in wretched shape. Efforts to reform came too late. When the recession hit, demand for cars plummeted. GM was on the verge of running out of cash when Uncle Sam intervened, throwing the firm a lifeline of $50 billion in exchange for 61% of its shares. Read more

Read Ezra Klein's Q&A with Steve Rattner here.

Auto Task Force's Steve Rattner Resigns

Timothy Geithner pronounced car czar Steve Rattner no longer. WaPo said he resigned. This is from the Treasury Department:

"With the emergence of both General Motors and Chrysler from bankruptcy, we enter a new phase of the government's unprecedented and temporary involvement in the automotive industry.

"I am very proud of the work done by the Auto Task Force, under the leadership of Steven Rattner and Ron Bloom, to help oversee the efficient, fair and commercial restructuring of two great American companies.

"With GM's restructuring complete, Steven Rattner, whose leadership and vision were invaluable to the Auto Task Force's efforts, has decided to transition back to private life and his family in New York City. We are extremely grateful to Steve for his efforts in helping to strengthen GM and Chrysler, recapitalize GMAC, and support the American auto industry. I hope that he takes another opportunity to bring his unique skills to government service in the future.

"Ron Bloom will assume leadership of the Task Force's activities as the government transitions its role away from day-to-day restructuring to monitoring this vital industry and protecting the substantial investment the American taxpayers have made in GM, Chrysler, and GMAC.

"Because of the President's commitment to this industry and the deep sacrifices of all stakeholders, GM and Chrysler have achieved a quick restructuring, and the economy avoided the devastation that would have accompanied their liquidation. Now, with day-to-day management of these companies in the hands of the private sector, the American taxpayers have a better chance of recouping their investment in these companies.

"There is still much work ahead to ensure that GM and Chrysler re-emerge as stronger, more competitive companies. President Obama has made it perfectly clear that it is the responsibility of their private boards of directors and management teams to deliver that result. And thanks to the hard work of Steve, Ron, and the entire Auto Task Force, they have a much better chance today of rebuilding those companies and making them once again symbols of American success." Treasury

Government's GM IPO Exit Strategy

Someone was asking for an exit strategy today. Here it is distilled:

So at this point, New GM, will be a privately-held company, not traded publicly on the New York Stock Exchange (or any stock exchange for that matter). However, it is the intention of the Obama administration to get New GM to become a publicly traded company as soon as reasonably possible. In this case, auto task force czar Steve Rattner, a private equity expert himself, believes that sometime in 2010 (probably mid-late 2010), New GM will have an "I.P.O." -- or an initial public offering. And it's at that point where the taxpayer can have an easier time tracking just what the U.S. government's shares are worth.

In fact, Rattner said it's very possible the first round of shares that the government sells will be at I.P.O. time, perhaps as much as 10% of the government's holdings. One thing Rattner and others on the task force assured reporters is that you wouldn't see the government sell its 60% stake in one fell swoop. It would be a gradual sell-off, starting at I.P.O. time and gradually getting out, which is why Rattner believes it's probably a 2-5 year process, AT BEST, for the government's investment. First Read