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Obama Says Auto Industry Is Recovering After GM IPO

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On: Tue, Nov 23, 2010 at 10:04AM | By: Sherry Christiansen


Obama Says Auto Industry Is Recovering After GM IPO

President Obama gave his approval regarding GM’s IPO last week, reitorating that the automotive industry is on the rise, which will lead to the American taxpayers getting their money back from last year’s government bailout. 

Obama stated: “Today, one of the toughest tales of the recession took another big step towards becoming a success story,” referring to the $20 billion that GM raised from its initial public offering last week.

The Detroit automaker was given $49.5 billion in government bailouts in 2009, and will be able to pay back $13.6 billion from its IPO.

Obama explained that if the government had not extended the offer for the bailout to U.S. auto companies, such as GM, it would have “resulted in economic chaos.”

“We've still got a long road ahead and a lot of work to do to rebuild this economy,” Obama said. “We are finally beginning to see some of these tough decisions that we made in the midst of crisis pay off,” he stated.

According to President Obama, the taxpayers are “now positioned to recover more than my administration invested” in the company. The IPO would lower the government's stake to 37 percent from 61 percent.

According to an unidentified spokesperson for the administration, the government is hoping to sell the remainder of its stake in GM by the end of 2012.

The Obama administration has received much criticism from the public for the government bailouts. John Boehner of Ohio, House speaker, has continued to express criticism of the bailout even after GM’s successful IPO. He said GM could “have been handled in a more orderly way by a bankruptcy judge without the heavy hand of the federal government.”

In October, a poll taken by Bloomberg showed that 34% of voters were in favor of the bailouts and believed they would support a strong economy in the future; 41% felt it would weaken the economy.

Company CEO, Ed Whitacre said, during an automotive conference in August, he was eager for the U.S. to sell its shares because it would boost employee morale and help GM sell more vehicles. Whitacre stated: “We don't like this label of Government Motors.”

The federal government has recently released a report stating that the bailout has been responsible for helping to save 1.3 million U.S. jobs.

According to Chris Borick, director of the Institute for Public Opinion: “A lot of the public animosity toward the bailouts is based on principle as much as it is on performance.” Borick also stated: “Even the good bottom-line news from GM won't necessarily overcome the broader dislike of government support for struggling corporations.”




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