Nov. 11, 2010
Suspend GM IPO, Consumer Leaders Tell Obama
WASHINGTON, D.C. – Urging President Obama to "exercise its control of GM responsibly, and to advance vital public interest objectives," consumer leaders today called for the government as primary owner to “arrange for the suspension of the IPO and then begin exercising the responsibilities attendant to ownership."
The IPO will reduce the government stake in the rescued company to 43 percent.
Consumer advocate Ralph Nader; Joan Claybrook, president emeritus of Public Citizen; Clarence Ditlow, executive director of the Center for Auto Safety; and Robert Weissman, president of Public Citizen, signed the letter.
The letter provides several rationales for suspending the IPO:
• Taxpayers may realize a $4.9 billion loss with the IPO, with reasonable prospects of a better performance by holding the stock.
• "The primary rationale of investing in GM had to be to preserve jobs and prop an economy in a severe downward spiral. … As majority shareholder in GM, the United States has the ability to direct or influence the company's investment decisions. As the U.S. reduces its share, so its capacity to influence such decisions diminishes." The letter notes that reported interest in the IPO from sovereign wealth funds and Chinese manufacturers underscores this concern.
• "Holding a majority stake in one of the world's largest auto makers, even if due to an historic anomaly, positions the U.S. government to directly advance the transformational changes we need" to address climate change.
• After suspending lobbying while undergoing the government rescue, GM has returned to lobbying, including on auto and truck safety, Wall Street reform, taxes, appropriations, climate change, fuel efficiency, trade (including trade agreements with Korea, Peru and Colombia, and negotiations at the World Trade Organization), and currency valuation. Argues the letter: "The government as majority shareholder should not permit this to occur; and it should not permit its shareholding stake to be reduced in such a way that GM gains greater latitude to affect policymaking."
Read the full text of the letter.