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Spokane, Washington  Est. May 19, 1883

U.S. wants to sell auto shares

Task force head tells panel GM IPO could happen in 2010

Ron Bloom, a senior adviser at the U.S. Department of the Treasury, speaks during a Congressional Oversight Panel field hearing on the Auto Industry Financing Program under the Troubled Asset Relief Program on Monday in Detroit.  (Associated Press / The Spokesman-Review)
Associated Press

DETROIT – The federal government plans to sell its shares in General Motors Co. and Chrysler Group LLC as soon as it can, the head of the autos task force told a congressional panel Monday.

“We are very eager to dispose of them as soon as possible,” said Ron Bloom, chairman of the Treasury Department task force overseeing GM and Chrysler. “On GM, our expectation of a GM IPO is 2010.”

Bloom said the government would not sell all of its shares at initial public offerings as it could get more money following an IPO should shares of the company rise. He did not give a timetable on such a sale of GM or Chrysler stock.

The U.S. government owns 61 percent of the new General Motors and eight percent of Chrysler. The task force is overseeing the two companies because they have received $65 billion in federal aid.

New versions of both GM and Chrysler recently emerged from short stays in government-funded bankruptcy protection, cleansed of old debt and burdensome contracts.

Bloom would not articulate any particular financial or operational milestones GM or Chrysler have to reach before the government would cash out its stock.

“It’s going to be based on the situation,” he said, adding that success would be measured in the taxpayers’ ability to get their money back.

GM’s treasurer, Walter Borst, testified that GM would seek to repay its loans faster than the six-year time frame outlined by the task force. He added that GM is now working on “fresh start” accounting measures that companies use to reorganize their books following a trip through bankruptcy court.

Also at the hearing, Bloom denied that the government had coerced Chrysler’s debtholders into dropping a legal protest that they were being treated unfairly in court. Some holders of $6.9 billion in secured Chrysler debt initially protested that they were being pushed behind unsecured creditors such as the United Auto Workers union’s retiree health care trust. But the debtholders dropped their protests after receiving $2 billion in cash to wipe out their debt.

Bloom said he spoke to former task force chief Steven Rattner, who denied making any threats to any of the lenders. Some of the lenders had received government money from the bank bailout program.

Rattner stepped down from the task force on July 13 and was replaced by Bloom, a former United Steel Workers union official.

The administration said Rattner had decided to return to private life and his family in New York City.

Attorney General Andrew Cuomo and the Securities and Exchange Commission have charged a state official and a political consultant with extracting millions of dollars in kickbacks from investment firms trying to raise money from the state’s big public pension fund.