In 2008 and 2009, the U.S. Treasury bailed out GM to help stabilize and restructure the company at the trough of the financial crisis. The bailouts of GM and Chrysler were part of the $700 billion Trouble Asset Relief Program created by Congress during the financial crisis in the fall of 2008.
"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."
Although GM is paying a premium for the government shares, Ammann said it's still a good deal for GM shareholders. The number of shares on the market will reduced about 11 percent, which 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.
Government-ordered pay restrictions will remain in effect. But a ban on corporate jet ownership and requirements on manufacturing a certain percentage of GM cars and trucks in the U.S. will be lifted. GM says it already has exceeded the manufacturing requirements and will continue to do so for the foreseeable future.
The company said it has no immediate plans to buy or lease corporate jets.
AP Business Writer Martin Crutsinger in Washington, D.C., contributed to this report.