GM stock offering plan sends taxpayers the wrong signal

Guest Editorial
When General Motors Co. issues its stocks as soon as November, the recovering automaker will mark a milestone Americans and Canadians have long awaited.

The initial public offering is an essential step in GM’s commitment to reduce government ownership of its operations to less than 50 percent, and to repay the U.S. Treasury’s $50 billion bailout when the automaker was at the brink of closing.

GM’s rebound this year is encouraging. It’s what bailout-weary taxpayers are eager to see.

The company is expected to issue its IPO sometime in November. When it does, however, the stock offering will be limited.

About 600,000 GM employees and retirees as well as GM dealers will get a chance to buy stock at the opening initial offering price — about $20 to $25 a share. The minimum investment will be $1,000.

Average U.S. and Canadian taxpayers will be shut out — and that’s difficult to accept.

Granted, GM’s IPO is a tricky proposition. Rarely do stock offerings come from businesses in which the government is a majority owner.

GM is attaching a low price to its stock in an attempt to expand the pool of potential investors given the economy’s weak condition and continued worries about the future of the domestic auto industry.

An October Bloomberg & Financial News report was more encouraging:

“’Even in a tough market, GM’s IPO should generate plenty of interest,’ said David Whiston, equity analyst with Morningstar Inc., an investment research firm in Chicago. ‘Auto sales in the U.S. appear to have bottomed out around 11.5 million vehicles a year. Any rise in the car market bodes well for GM stock,’ he said.”

This is the message GM’s IPO appears to send to U.S. and Canadian taxpayers: “Thanks for getting us through the hard times. Now that we appear to be on the road to financial health, we owe you no special favors.”

Taxpayers swallowed hard when the Bush and Obama administrations came to the rescue of GM and Chrysler. At a time when Wall Street received a $700 billion bailout, taxpayers reluctantly conceded the auto industry was too important to fail.

To offer GM employees, retirees and dealers a chance to get in on the ground floor of the company’s recovery without extending that opportunity to the public doesn’t seem fair.

The shares the company is expected to offer are affordable. They can reassure taxpayers that coming to GM’s aid not only was the right thing to do, but a profitable decision as well.

GM has shown this year that it’s on the road to recovery. The public ought to share its good fortune.