Ed Whitacre is confident that the government made a wise investment when it decided sink money into GM and that American taxpayers will see a profit off of their investment, and sooner rather than later. He believes this so much so that he even made a promise to Nancy Pelosi to the same effect. The company promises to have a $6.7 billion loan paid back by June, but the company will have to go public in order for taxpayers to see a profit; the government holds a 61% stock in the company. The market value of GM would have to reach $67 billion for the public to recoup any investment.
Steven Rattner, former head of the Treasury’s auto task force, said that GM has progressed to such a point where a full return is very likely possibility, but the amount of the return lies largely on how long the Treasury decides to hold the stock before selling.
Many believe that things in the American auto industry are looking up. Erich Merkle, president of automotive analytics firm Autoconomy, also mentions that even if the investments in GM and Chrysler do not turn a profit, they were a good idea as they helped deter economic catastrophe.
-By: Stephen Calogera