When executives from General Motors begin pitching its public stock offering to investors this week, they will extoll the company’s financial turnaround, its snazzy new car lineup led by the plug-in Chevrolet Volt, and its growing operations in China and other global markets.
Absent from the pitch? The extraordinary role that the federal government has played in fixing the nation’s biggest automaker.
While the government’s $50 billion bailout last year saved GM from liquidation, the Obama administration has taken great pains to distance itself from any appearance of running the company. Even a hint of government meddling could have a negative effect on the value of the American taxpayers’ stake in a publicly traded company.
Yet interviews with GM and federal officials show that Ron Bloom, a senior adviser to the Treasury secretary Timothy F Geithner, is told about actions that GM management and the board are contemplating before implementation.
Large private investors, like Kirk Kerkorian or Warren Buffett are rarely involved in the day-to-day running of companies in which they hold major stakes. They recommend broad strategic parameters and appoint directors to oversee the execution.
The Obama administration evidently took a similar tack with GM.
“If you own 60% of the company, you set the direction and let your board carry it out,” as M P Narayanan, a finance professor at the University of Michigan, describes it.
The New York Times