Bailed-Out GM Wants To Help Bailed-Out Ally With Some Of Its Bail-Out Money. Investors Not Amused

Bailed-out GM might sink $2 to $4 billion into likewise bailed-out Ally Financial to buy some of the lender's international operations. Ally "ironically wants to use the proceeds to help repay its own federal bailout aid," says Reuters. That plan does not sit too well with some observers. Says the wire: "Analysts and investors disagree on whether that would be the best use of cash, with some preferring a stock buyback or dividend payment." Large banks have paid back the Treasury the bailout funds they received, with GM and Ally the holdouts. GM can always take the position (popular with its apologists) that it does not owe anything to the taxpayers. Treasury took stock instead of an I.O.U.  but "critics of GM's $50 billion federal bailout in 2009 say the Obama administration stuck taxpayers with a bill that will never be paid in full as Treasury's 27 percent stake in GM remains underwater," Reuters says. To get its money back,  Treasury would need to sell its remaining 500 million shares of GM for more than $52 each. The stock is at $21. However, if GM would use its $33 billion cash pile (also a favorite talking point amongst the company's fans) to declare a dividend or to buy back shares, the stock could reverse its downward course. Which would look a little better, especially three months before the elections. Remember: If you pay U.S. taxes, you are a GM investor, like it or not. from The Truth About Cars http://www.thetruthaboutcars.com

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