TARP Payback Continues: Here’s $1.8 Billion More From GM IPO

In addition to having played a huge – and essential – role in saving the economy (ours and the world’s) from a second Great Depression, it appears that TARP is paying off. The Treasury Department has announced that it received $1.8 billion in additional net proceeds from the General Motors initial public offering (IPO), bringing overall net proceeds for taxpayers from the GM IPO to $13.5 billion. 

On November 23, the Treasury received $11.7 billion in net proceeds from the sale of 358,546,795 shares of common stock in GM's IPO. The underwriters in the offering had a 30 day option to purchase up to 53,782,019 additional shares of common stock from Treasury at the same price to cover over-allotments. The underwriters exercised this over-allotment option in full on November 26, and the Treasury has now received $1.8 billion in net proceeds from the sale of those additional shares.
 
The exercise of the over-allotment option increased the overall amount of GM common stock that the Treasury sold in the GM IPO to 412,328,814 shares. In total, the GM IPO reduced the Treasury's ownership of GM's outstanding common stock by nearly half from 60.8 percent to 33.3 percent. 
 
The Treasury had invested a total of $49.5 billion in General Motors. In October, the Treasury announced that it had accepted an offer by GM to repurchase $2.1 billion of preferred stock – a transaction that is expected to occur in mid-December 2010. With this repurchase and the IPO, taxpayers will have received a total of $23.1 billion from GM through repayments, interest, and dividends since the company emerged from bankruptcy in July 2009. Following the IPO and the preferred stock repurchase, the Treasury's remaining stake in GM will consist of 500,065,254 shares of common stock.
 
The proceeds from the GM IPO bring the total amount of TARP funds that have been returned to taxpayers to nearly $254 billion.