AOL Money & Finance

Why are shares of General Motors still trading?

Shares of General Motors (NYSE: GM) fell 21% yesterday on concerns that the $9.4 billion in taxpayer-funded loans to be doled out to the company over the next 24 days will not be enough to stave off bankruptcy. Standard & Poor's has said that there is a "high" likelihood of bankruptcy for the company.

But even after the beat down doled out by the market yesterday, GM still had a market cap of more than $2 billion. This tells me that our elected officials are not being nearly tough enough in securing the best terms for taxpayers.

Here's the problem: Without government aid, General Motors would without a doubt be headed for bankruptcy, with the creditors facing enormous losses. Shareholders would, without question, be completely wiped out under that scenario.

So why is the government allowing its generous loan to prop up the company's stock price? Given the strong possibility that GM is headed for bankruptcy even with these loans -- and taxpayers will lose their investment just like bondholders -- the government should be getting a bigger chunk of the upside if things somehow end well for GM.
Get the latest on cars and trucks
from GM and all brands at AOL Autos.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA+30.6910,464.40
NASDAQ+6.872,176.05
S&P 500+4.981,110.63

Last updated: November 26, 2009: 03:01 AM

BloggingStocks Exclusives

Hot Stocks

Learn More About GM Cars

General Motors Brands:
Find Your Next Car

AOL Autos New Cars and Used Cars

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

    BioHealth Investor Headlines

    WalletPop Headlines

    My Portfolios

    Track your stocks here!

    Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

    BloggingStocks Partners

    More from AOL Money & Finance

    WalletPop Headlines