Should GM repay $10B rescue cost? CEO says no
Todd Spangler, Detroit Free Press7:51 a.m. EST December 17, 2013
He says the government took a risk like any other investor
(Photo: ERIC SEALS Detroit Free Press)
STORY HIGHLIGHTS
- Dan Akerson says GM shouldn't have to repay Treasury for losses from the bailout
- The government lost about $10 billion
- He says the government benefited from its investment
WASHINGTON -- The General Motors bailout may have cost the government $10 billion, but GM CEO Dan Akerson rejects any suggestion that the company should compensate for the losses.
He says Treasury officials took the same risk assumed by anyone who purchases stock.
"I would not accept the premise that this was a bad deal," Akerson said during a question-and-answer session at the National Press Club in Washington. He also said the government's $49.5-billion aid to GM helped save billions of dollars in tax revenue and government social services.
Akerson spoke in the wake of Treasury announcement last week that it sold its last shares in GM and Akerson's decision to retire in January. The automaker's board of directors named Mary Barra, the company's first CEO, to succeed Akerson.
The speech also came as GM announced it is investing $1.2-billion in five U.S. plants, which Akerson said is a recognition that after 15 straight profitable quarters the automaker can't rest on its success.
"We are in a capital-intensive business that demands steady and significant investment," Akerson said, as he discussed many of the changes that had to be made to the automaker's corporate structure after exiting a "quick rinse" bankruptcy in 2009.
Akerson said it fell to him and his team to restore GM's good name, transform operations and "put quality and the customer back at the center" of the company's decision-making, a process he called "the biggest cultural change we've been able to infuse into the new GM."
He said GM's bloated and overly complex operations have been streamlined, products are better and, with the government's help, a crushing debt was reduced.
"We've been trying to fix this airplane while in the air," he said.
Akerson said that GM repaid all the debt issued by the government beginning in December 2008 when George W. Bush was still president and extending into the first year of Barack Obama's presidency. He added that it was the Treasury's decision -- though one he clearly supported -- to take an ownership stake in the form of company shares.
Asked whether GM should pay the difference between the amount the government provided the company and the return from the sale of the shares, Akerson said the "die was cast" by Treasury when it decided to take shares. For GM to make up for any shortfall could result in lawsuits from other shareholders. Those investors expect the company to resume paying a dividend for the first time since it exited bankruptcy in July 2009.
He also defended the deal as one that saved millions of jobs, saying "net-net, it was a positive for the U.S. economy."
Now, it will be up to Barra to continue GM's success. Monday's news that the automaker is upgrading and expanding factories in Flint, Detroit-Hamtramck and Romulus; as well as others in Toledo, Ohio, and Bedford, Ind., was meant to demonstrate that momentum.
"This will bring the four-year total of investments in our U.S. plants to more than $10 billion," Akerson said. He said about 7,500 people already work in those five plants and today's announcements will create or retain more than 1,100 jobs.
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