Government in a bind over General Motors

December 27, 2011 12:00 AM

The Obama administration and the U.S. Treasury is in a tough position regarding the future of General Motors (GM), as they still own stock in the company but can't sell it without taking a massive loss, reports Bloomberg.

Due to the government bailout, the U.S. owns shares of GM, which it needs to sell at $53 per share to break even. However, the stock price is currently at $20.50, which would mean a large chunk of taxpayer money gone if the government sells now. In fact, the U.S. would lose $17 billion on the bailout if they cashed out at this point.

"The administration is in a Catch-22," Dan Ikenson, an economist at the Cato Institute, told the news source. "They want to hold on and get the best price, but the longer they hold onto it, they come open to the scorn that the administration still has a horse in the race and could make policy that is favorable to GM."

While the U.S. Treasury needs to make good financial decisions on a massive scale, drivers have to deal with similar issues on a smaller level. For example, investing in auto maintenance can pay off in the long run, as it can help prevent costly car repairs in the future.

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