“Government Motors” became General Motors again this week, 17 months after the Obama administration rescued the carmaker, fired its chief executive and pushed it through bankruptcy.
Ron Bloom, who supervised the restructuring for the government, left Washington on Friday for a long drive to his home in Pennsylvania – in a 2003 Ford Mustang.
Along the way he could mull the initial public offering of Ford’s biggest US competitor. GM’s shares have traded up from Wednesday’s $33 offer price, but not too strongly to suggest the sellers – led by the US government – left too much money on the table.
In the days running up to the IPO, Mr Bloom and the underwriters decided the Treasury should sell more of its 61 per cent stake to capitalise on strong demand and a higher-than-expected price for the company, even if it meant crystallising a bigger loss on the rescue.
“There’s no satisfying some of our critics . . . In the cheap seats you can sit there and say ‘why didn’t you wait?’ and, look, maybe history will say the stock goes up a lot, but you can only make a decision with the facts you have at hand,” he says.
One element that factored into that decision was nervousness from providers of private capital about being mixed up with the government.
By reducing its stake to 33 per cent compared with earlier plans to cut it to just below 50 per cent, “the government [was] decisively demonstrating its commitment to leave”, Mr Bloom says. Some people close to the deal believe the final exit could now happen by the end of next year.
“We heard a lot of feedback from the underwriters from the investors that this was important,” Mr Bloom says. “We think we made the balance of our stake worth more by being willing to sell more today.”
GM’s IPO filing made reference to the risks of being in bed with the government, but, even though he recognises the concerns are a reality, Mr Bloom suggests they are groundless: the bail-out, restructuring and sale was about the economy not politics.
He disputes claims of government interference by Steven Rattner, who ran the government’s automotive taskforce with Mr Bloom until last year.
Mr Rattner had said one example where politics did play a role was in the government nixing a move by GM to leave its Renaissance Center headquarters in Detroit because of the impact that would have on the troubled city.
“I don’t want to get into a back-and-forth relative to Steve’s book, but I can assure you that in that matter the government did not instruct General Motors what to do,” he says. “It is simply untrue that we told them that they couldn’t vacate the RenCen.”
Whatever the reality of that episode, GM and Chrysler, with government assistance, and Ford, without, are now weathering a still slow climate of sales. Mr Bloom says: “At this still somewhat depressed level the Big Three are all making money ... and they are all gaining market share.”