CBS Early Show Declares Auto Bailout A Success, Celebrates 'GM's Big Comeback'
At the top of Thursday's CBS Early Show, co-host Harry Smith cheered the public trading of General Motors stock as evidence that Obama administration's bailout of the auto industry had worked: "GM's big comeback. In a stunning turnaround, General Motors begins to sell it's stock less than 18 months after the government's massive $50 billion bailout."
Smith even went so far as to ask: "Will American taxpayers make a profit on the investment?" Moments later, fellow co-host Maggie Rodriguez praised the companies "amazing turnaround" and observed: "What a difference a year and a half makes....here we are17 months after a bailout GM is trading publicly again." Later in the show, Rodriguez remarked that she hoped the cost to British taxpayers for the upcoming royal wedding of Prince William and Kate Middleton "ends the way GM's is ending, with the taxpayers getting paid back."
Business correspondent Rebecca Jarvis touted the GM bailout as an essential job-saving measure: "Literally hundreds of thousands of manufacturing jobs in this country were potentially going to go away. The government at the time then steps in with a $50 billion loan, a very controversial decision at the time, to save the struggling automaker." She described the company trading stock again as a "major milestone."
Only near the end of her report did Jarvis acknowledge that there was still a long way to go before GM came anywhere near paying back taxpayers: "Right now today, the stock debuts, like I said, at $33 a share, but it's significant because it has to continue to climb in order to make back all of our investment. In fact, we have to basically get $44 a share for every share of General Motors in order to get back that entire $50 billion investment."
It turns out that Jarvis may have actually been low-balling the amount of money per share needed for American taxpayers to break even. An article for The New York Times 'Dealbook' blog declared: "To break even, the Treasury Department will need to sell its remaining 500 million shares at an average price of $53 each in the months and years to come." In fact, in an interview with Bloomberg Radio on Wednesday, the former head of the U.S. Automotive Task Force, Steve Rattner, explained that, "The government may lose $5 billion to $7 billion on its rescue of the auto industry."
Incidentally, according to an Associated Press report, Rattner, "...agreed Thursday to pay $6.2 million to settle civil charges over his role in an influence-peddling scandal involving New York state's public pension fund." The article goes on to note that "As part of the settlement, Rattner will also be barred for at least two years from working in the securities industry."
The Early Show was the only network morning show to do a full story on General Motors. On ABC's Good Morning America, news anchor Juju Change did a news brief: "As stocks begin trading this morning, General Motors becomes a public company again. This morning's initial public offering will be worth up to $23 billion, which would be a record. It will reduce the government's stake in the company by 30 percent. Meantime, a new report from a non-profit group finds 1.4 million jobs were saved by the government's auto industry bailout."
NBC's Today offered a more measured report, with economics correspondent Trish Regan noting that it was "a big day for GM" but also warning: "While it may do very well today...the big question here is how is this company going to be faring six months from now? That still remains to be seen."
Here is a full transcript of the November 18 Early Show segment:
7:00AM ET TEASE:
HARRY SMITH: GM's big comeback. In a stunning turnaround, General Motors begins to sell it's stock less than 18 months after the government's massive $50 billion bailout. Will American taxpayers make a profit on the investment? We'll take you live to the stock exchange.
7:01AM ET SEGMENT:
MAGGIE RODRIGUEZ: We begin this Thursday morning with the amazing turnaround of General Motors. Beginning this morning, Wall Street is once again buying and selling stock in America's biggest car company, now a whole lot smaller after a major government bailout and restructuring. CBS News business and economics correspondent Rebecca Jarvis is at the New York Stock Exchange this morning. Rebecca, good morning.
REBECCA JARVIS: Good morning, Maggie.
[ON-SCREEN HEADLINE: GM's Big Comeback; Selling Stock 18 Months After Gov't Bailout]
RODRIGUEZ: What a difference a year and a half makes. You were there for the initial bankruptcy hearings and now here we are17 months after a bailout GM is trading publicly again. This is significant on so many fronts, Rebecca.
JARVIS: Maggie, this is a major milestone, both for General Motors as well as for the country. Remember, less than two years ago General Motors was on the verge of collapse. Literally hundreds of thousands of manufacturing jobs in this country were potentially going to go away. The government at the time then steps in with a $50 billion loan, a very controversial decision at the time, to save the struggling automaker. And today it's sort of a major milestone in that story in that General Motors will be going public. Its shares will begin trading here at the New York Stock Exchange at $33 a piece. They are expected to raise about $23 billion overall in the transaction. And that will help pay back our taxpayer stake in the company to the tune of about half. So, we'll basically be getting back about half of our investment, our initial $50 billion.
RODRIGUEZ: Which is great. And I think it may be an incentive for consumers, who were turned off by the government ownership, to start investing in the brand again, which is really what it's going to take to keep GM successful.
JARVIS: It absolutely will, Maggie, that's such a good point. Because not only is what's happening today important but the future of this company stock price is important. Right now today, the stock debuts, like I said, at $33 a share, but it's significant because it has to continue to climb in order to make back all of our investment. In fact, we have to basically get $44 a share for every share of General Motors in order to get back that entire $50 billion investment. There's been a lot of excitement of course here at the New York Stock Exchange as well as around the world to invest in this transaction.
RODRIGUEZ: So we will watch it closely. Rebecca Jarvis on Wall Street. Thank you, Rebecca.