Apparently the U.S. government is considering taking an $11 billion loss by selling the 26% stake it has in GM shares so that President Obama doesn’t have to deal with the ramifications of owning 1/4 of a struggling automaker while campaigning for reelection. Despicable.

If you’re wondering what I mean by struggling, don’t think for a moment that GM is doing well. All the reported good news over GM has been whitewashed to make it look like the American auto industry is back on their feet and doing well, when really only Ford is the one running a competent business operation. GM’s profitability is dependent upon a series of tax breaks on massive losses that it suffered pre-bankruptcy. And no, it’s not kosher to claim tax breaks on losses and debts that are no longer on your books because you underwent a federal-expedited bankruptcy that shunted all of those losses and debts over to a shell of a company designed to absolve GM of all its troubles.

In  a little reported part of GM’s bankruptcy reorganization, the “Motors Liquidation Company” was formed, taking on all of GM’s debt and all of the public shareholder’s stock. Suppliers, banks, average Joes with a few shares of GM stock; they all got hosed. And despite this hosing, GM still hasn’t managed to get its act together. But that’s for another post some other day.

In the here and now, the Federal Reserve is playing politics with the American taxpayer’s money. Taxpayer funds supplied $50 billion to ensure that GM wouldn’t fail, and it did regardless. That $50 billion netted the US government a 61% share of GM (with the rest split by Canada and bond holders). After GM’s public IPO, the federal government’s ownership in GM was reduced to 26.5%. GM stock re-debuted on the New York Stock Exchange at $33-a-share, and has since dropped to $29.93.

That’s not a horrible drop by any measure, but it’s nowhere near the $53-a-share that the US government needs to break even. Instead we’ll just take a multi-billion-dollar loss just so Obama can claim it as a successful instance of government intervention.

Wall Street Journal: U.S. Hurries to Sell GM Stake