The L.A. Times takes a smart tack on the General Motors IPO story, reporting that it shows how Wall Street is up to old tricks.

The thing is, both GM and Wall Street owe their very existence to the taxpayers. We bailed them out, else they’d now both be relics.

So you’d hope the Street might show a little more sensitivity toward the average investor when one of its “hottest initial public offerings” of the year, as the LAT says, happens to be a bailout special. Nope:

That’s because most Americans won’t have access to the new shares of the Detroit automaker. And many of those who do are likely to be well-heeled customers at big Wall Street firms.

The situation is not much of a surprise on Wall Street, where little guys often are shut out of deals, especially coveted ones where demand far outstrips supply and where fast-rising prices usually provide quick profits to anyone getting IPO shares.

The LAT reports that the retail component of this IPO will actually be a bit higher than the average IPO. But this one obviously isn’t average:

Underwriters are expected to allocate about 20% of the shares to so-called retail investors, more than the 15% that’s normal in IPOs, said Scott Sweet, senior managing partner at IPO Boutique.

However, Sweet said, there were rumors last week that as much as 30% of the deal would go to individuals before demand rose among large institutional investors, forcing the retail amount to be scaled back.

And while the expected price has risen a bit with demand, it’s unclear that it’s risen enough:

“The brokers are going to get far less than they could possibly place, and they’re going to cherry-pick their best clients and reward them for their previous business,” he said.

Seems like the price isn’t high enough then, no?

It’s really too bad here that the Obama administration didn’t make a statement here by shunning Wall Street and going with an auction model a la Google.

I’m sure the thought never crossed its mind.

The big problem for Wall Street with this is that taxpayers will get paid back at the price Wall Street sets the IPO. If it hands off special access to its cronies, lowballs the price so they can lock in free gains, and shares jump, say 30 percent in week one, that’s effecitvely money coming out of taxpayers’ pockets, and the Street is going to have another nasty political problem on its hands.

It’s worth watching this one closely. Excellent work by the LAT on the pre-game.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.