Reports » US
US stock market daily report (December 09, 2013, Monday)
American taxpayers face a loss of nearly $10.5 billion as the U.S. Treasury Department unloaded their final shares of General Motors Company (GM-NYSE) held from the bailout during the financial crisis. Sale of taxpayers interest in GM brought in nearly $39 billion. Initial investment in the car maker by taxpayers through the Troubled Asset Relief Program tallied $433 billion to help GM as it teetered on the brink of bankruptcy nearly five years ago.
U.S. government said the rescue was needed to avoid far greater consequences for the U.S. economy including the loss of over a million jobs and billions of dollars lost in personal savings. GM has been pushing for the government to unload taxpayers stake to release the car maker from salary restrictions maintained by the government.
President George W. Bush initiated the GM bailout with a completion of the bailout at the hands of President Barack Obama administration.
Treasury Secretary Jacob J. Lew said in a statement, “The President’s leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression. With the final sale of GM stock, this important chapter in our nation’s history is now closed.”
President Barack Obama said in a statement, “When I took office, the American auto industry – the heartbeat of American manufacturing – was on the verge of collapse. In exchange for rescuing and retooling GM and Chrysler with taxpayer dollars, we demanded responsibility and results.”
GM Chairman and CEO Dan Akerson said in a statement, "We will always be grateful for the second chance extended to us and we are doing our best to make the most of it. Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again. Continued investments, innovation, and job creation are just some of the ‘returns’ of a healthy GM and domestic auto industry. Our work continues uninterrupted, and we will keep our sights squarely on our customers and transforming the way we do business.”
Volcker Rule Approval Expected Tuesday
According to a draft of the Volcker rule - part of the 2010 Dodd-Frank law - which has not yet been publicly released, banks that buy and sell securities on behalf of clients will face new hurdles. The Volcker rule is expected to be approved by the five regulatory agencies writing it, on Tuesday.
Volcker rule will restrict compensation arrangements for risky trading incentives, as regulators seek to prevent banks from making volatile bets with their own money. The rule will require that banks provide “demonstrable analysis of historical customer demand” for financial assets they buy and sell on behalf of clients. Essentially banks will be required to prove previous engagement of this type of trading. The requirement is designed to keep banks from trying to disguise banned bets designed to make a profit as permissible market making. Part of the rule bans proprietary trading but, allows banks to engage in market making or buying and selling assets such as stock and bonds on behalf of customers. Stricter provisions in the rule could make it tougher for banks to enter new market-making businesses.
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