Today General Motors announced it will spend $5.5 billion to repurchase 200 million shares from the U.S. Treasury at about $27.50/shr.  In turn Treasury announced its intent to sell its remaining stake of about 300 million shares within the next 12-15 months.  GM will not be the buyer.  Instead the government intends to liquidate its position “through various means in an orderly fashion.”

Today’s announcement all but ensures a multibillion dollar loss to the American taxpayer.  GM received about $50 billion from Treasury under the Troubled Asset Relief Program (TARP).  Today’s sale recovers roughly $29 billion for Treasury leaving about $21 billion outstanding.  GM’s stock price will need to rise from its current $27.50/shr to almost $70/shr simply for Treasury to breakeven.  To put this another way if Treasury were to sell its stake at today’s price it would lock in a $12 billion loss for the American taxpayer.

While we’re on the subject of the American taxpayer – many of whom are being vilified for not paying their “fair share” – it’s important to note GM retains $45 billion of NOLs (Net Operating Losses).  Should GM ever turn a profit (and this is a big IF) the first $45 billion will be tax free.  Tax free!  At the 35% corporate tax rate that’s $15.75 billion of tax revenue that Treasury will not collect.

For all the vilification of AIG, Bank of America, Citi, et al. each one of these deals brought a profit to Treasury.  Treasury’s losses on GM could total close to $28 billion between stock sales and lost tax revenue.

President Obama heavily promoted his decision to use public funds to “rescue the auto industry” when he campaigned for re-election in important swing states like Ohio and Michigan.  Was this $28 billion loss ever mentioned during his rallies?

When it comes to fairness our “leadership” has made clear that fair is more than literally a four letter word.