Today, the Congressional Oversight Panel (COP) overseeing the government's bailout activities released a report (.pdf) on the auto industry rescue. In it, the COP said that it's unlikely the government will recoup all of its $40 billion bailout of General Motors and Chrysler, though the loss appears to have been reduced to $19 billion. If further criticizes the handling of the GM initial public offering of stock, saying that taxpayers might have been better off if the government had waited. That might be true, but putting it off would have resulted in other intangible costs.
Over at 24/7 Wall St., Douglas A. McIntyre analyzes the COP's complaint:
The panel is right about one thing. Treasury could have held its GM shares much longer. Taxpayers may have taken a paper loss for a while. The odds, however, that US vehicle sales would recover in the next three or four years is likely given how low they were in 2009. There was also some reason to believe that the stock market would recover more of its 2008 and 2009 losses as time passed. The Treasury did not sell near a top because it was too impatient. There has never been any taxpayer pressure to offer GM shares to the public. A "buy and hold" strategy would almost certainly have worked better than a "buy and sell right away" approach. That strategy has certainly worked well for holders of Ford shares.
McIntyre may very well be correct about the loss. Although it is easy for us to criticize the Treasury for being impatient, it really isn't that simple. Minimizing the loss for taxpayers is supposed to be at the front of Treasury's mind, but that's far from their only concern.