General Motors' announcement of an initial public stock offering, little more than a year after its near-death experience, is an auspicious development for taxpayers.
If all goes according to plan, Washington will begin selling off its majority stake in the shrunken giant, possibly as soon as October. That's a remarkable reversal of fortune since last summer, when GM was rescued with $50 billion in public money and a government-orchestrated bankruptcy. The company, and the domestic auto industry, have come a long way since those dark days.
But temper the applause. The IPO isn't risk free. And coming one month before the midterm election, you don't have to be much of a cynic to catch a whiff of politics in the timing.
GM's return to profitability, in a down market no less, is a testament to dramatic downsizing, more desirable cars and the fact that it shed most of its debt in bankruptcy. The company earned $2.2 billion in the first half of 2010. But two quarters in the black after four years of red ink is no guarantee of solidity - not with the global economy limping along amid fear of a double-dip recession and hushed talk of possible deflation.
No stock price has been set. And the U.S. Treasury hasn't said how much of the public's 61-percent stake it will sell. So no one knows how much of that $50 billion will immediately come back to the treasury. Still, things are looking up at GM, and what's good for GM is good for taxpayers. hN