WASHINGTON – Retiring General Motors CEO Dan Akerson says the government bailout of his company was a net gain for taxpayers — even though they lost $10.5 billion in the deal.
Akerson says if GM had gone under, taxpayers would have had to pick up pension plans with a $26 billion shortfall, and the government would have lost billions in tax revenue and would have had to make benefit payments such as unemployment compensation.
He cited a report released last week by the Center for Automotive Research, an Ann Arbor, Mich., research firm, that said if the government had not intervened, nearly 1.9 million jobs would have been lost in 2009 and 2010. Federal and state governments also would have lost $39.4 billion in tax revenue and payments made for unemployment benefits and food stamps, the study said.
GM won’t repay the $10.5 billion, Akerson said, because the government agreed to make loans and take company stock in exchange for the $49.5 billion bailout in 2008 and 2009. The government sold the last of its General Motors Co. stock on Dec. 9.
“We paid back all that we owed and someone took an equity position in us,” he said of the government.
Akerson, speaking to reporters at the National Press Club on Monday, also said if GM repaid $10.5 billion to the government, it would be unfair to stockholders who invested based on the current capital structure. “I can tell you there would be shareholder suits that would be difficult to defend,” he said during a question-and-answer session after his speech.
Bailout critics say saving GM put the government in a position to choose winners and losers when it should have stayed out of private business.
Akerson wouldn’t comment on whether the board will restore a dividend for the first time since July of 2008. But he hinted that one is coming, telling reporters that since GM has retired preferred stock that carried high dividend rates and payments, the company now has the “bandwidth” to maintain capital spending while rewarding shareholders.
During his speech, Akerson said he accomplished his goals and is leaving the company with a strong foundation. GM announced last week that Akerson is stepping down Jan. 15 to care for his ailing wife. The board named product development chief Mary Barra to replace him as CEO.
He said that GM’s new leaders have experience, optimism and a strong competitive streak.
Although he cautioned that the next chapter in GM’s history will not be easy for Barra and her team, Akerson said he’s confident the company won’t slip back into its old ways of delayed decisions, overspending and bureaucratic actions.
During his tenure at GM, Akerson has preached that the company can’t stand still and refuse to change; that it must benchmark competitors and never be satisfied with being just OK. “That competitive gene, I think, has been well implanted into the culture of the company,” he said.
Akerson, 65, said he accomplished goals of restoring GM’s good name, transforming the way it operates, and putting quality and customers at the centre of decisions.
He took over at GM in 2010, shortly after the company emerged from bankruptcy protection.
GM was limited under government restrictions on executive pay while the Treasury still owned stock in the company. But now that the final shares have been sold, the restrictions have been lifted, and Akerson said the company will pay more to be competitive in attracting and keeping talent.
The company, he said, has no ad campaign planned at the moment to thank taxpayers or tout the fact that it’s no longer owned by the government. But if it does decide to do something, it likely would take place during the Super Bowl, he said.