If the government could investigate itself for insider trading, the timing of a recent stock sale might have triggered a few alerts.

In December, the Treasury Dept. sold the last of its shares in General Motors (GM), wrapping up the controversial bailout that began when GM declared bankruptcy in 2009. Taxpayers ultimately lost about $10 billion on GM, and some critics argued the Treasury could have recouped more of its investment if it held on to its GM shares longer and waited for the price to rise. But now the timing of the sale looks superb, especially since a mushrooming safety controversy — which the government knew about for years but the public didn’t — has been pushing down the value of GM shares.

In February, GM announced the recall of about 1.4 million Chevrolet Cobalts, Pontiac G5s and other vehicles for a faulty ignition switch that’s been linked with 13 deaths in 31 crashes. As more information about the safety problem has surfaced, it's become apparent GM knew about it for nearly 10 years and did nothing to fix it, which has now prompted Congress to investigate and the Justice Dept. to consider pressing criminal charges. Had the Treasury held on longer to its GM shares, that could have led to a bizarre situation in which the government ended up investigating and perhaps even prosecuting a large business entity it held a controlling interest in.

A strange situation

The whole situation is weird enough as it is. A chronology of events GM provided to the government’s auto-safety regulator, the National Highway Traffic Safety Administration (NHTSA), shows GM was internally investigating the ignition-switch problem even in the midst of the company’s 2009 bankruptcy filing and government bailout, which gave the Treasury Dept. a 61% ownership stake in GM. There appears to have been a lull in GM’s internal inquiry from 2009 to 2011, but the probe intensified from 2012 to early 2014, leading to GM’s decision to mount a recall in February.

General Motors returned to public markets in November 2010. On Dec. 21, 2012, the Treasury Dept. announced it planned to unload its GM shares over the course of the next 12 to 15 months, and it completed that process by Dec. 9, 2013. During that time, the price of GM shares mostly rose, ranging from about $27 to $41. The peak price in GM's post-bankruptcy era occurred about two weeks after Treasury sold its final GM shares, at the end of 2013. So the Treasury sold as the stock price was rising, finally exiting its position with the share price near its peak — and about to fall.