DETROIT — The U.S. government’s foray into the car business is slowly coming to an end.

The Treasury Department said Wednesday that it will sell its remaining stake in General Motors in the next year or so, winding down a $50 billion bailout that saved the iconic American car giant but also set off a heated debate about government intervention in private business.

Additional Photos

President Obama speaks last year at General Motors’ Orion assembly plant in Orion Township, Mich., where the government’s bailout played well among voters. The Associated Press

Taxpayers will lose money on the deal, but it gets the government out of the car business. GM has done well over the past three years, piling up $16 billion in profits as car sales bounced back.

Now it looks forward to losing the stigma of government ownership – including the derisive moniker “Government Motors” – that it claims cost it sales since it left bankruptcy protection in 2009.

As part of a deal announced Wednesday, GM will spend $5.5 billion to buy back 200 million shares from the Treasury from now through the end of the year. That will leave the government with 300 million shares, or a 19 percent stake, which it plans to sell during the next 12 to 15 months.

The government bailed out GM with $49.5 billion during the financial crisis in 2008 and 2009.

Otherwise the struggling automaker would likely have been auctioned off in pieces. The Treasury Department says it will have recouped about $28.7 billion after GM completes its buyback. So, breaking even would require selling the remaining 300 million shares for an average of about $70 each.

That’s more than double the current trading price. GM will buy the 200 million shares at $27.50 each, about an 8 percent premium over Tuesday’s closing price of $25.49. The shares shot up more than 8 percent to $27.60 in midday trading Wednesday.

At a more realistic price of $30 apiece, the government gets back $9 billion for its remaining shares. That means taxpayers would recoup around $38 billion, or about 77 percent, of the initial investment, resulting in a loss of about $12 billion.

GM says having the government as an owner kept customers away from dealerships.

Chief Financial Officer Dan Ammann told reporters Wednesday that GM has “market research that we’ve done over time that has suggested that the government involvement in the business has had some impact on sales.” He said GM should benefit when the government is completely out.

However, government-ordered pay restrictions will remain in effect until the Treasury completes the sale of its remaining 19 percent stake. CEO Dan Akerson has said the pay limits have hurt the company as it tries to recruit top talent.

The bailouts of GM and rival Chrysler were part of the Trouble Asset Relief Program created by Congress during the financial crisis in the fall of 2008. Last week, Treasury sold its final shares of stock in insurance giant American International Group, which had received the largest amount of government support during the financial crisis. With Wednesday’s GM stock buyback, the government has recovered $386.5 billion – 92 percent – of the $418 billion in funds disbursed through the TARP program.

Treasury said Wednesday that the investment in GM was worth it.

“The auto industry rescue helped save more than a million jobs during a severe economic crisis,” said Timothy Massad, Treasury’s assistant secretary for financial stability. “The government should not be in the business of owning stakes in private companies for an indefinite period of time.”

Massad said that exiting the GM investment “is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests.”

Initially the government got 912 million shares in exchange for the money it loaned to GM. It sold 412 million shares for $33 apiece in GM’s initial public stock offering in November of 2010.

GM shares rose shortly after the IPO, but then slid as the U.S. economic recovery slowed and Europe’s economy took a turn for the worse. As the shares fell, the government balked at further sales.

Although GM is paying a premium for the government shares, Ammann said GM’s other shareholders benefit because the number of shares on the market will be reduced about 11 percent. That should increase the value of the remaining shares.

The move was approved by the GM board on Tuesday evening after the company got opinions from its management and financial advisers, GM said.

GM will fund the deal out of its cash balance, which at the end of September was close to $32 billion.

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