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With General Motors' bankruptcy filing all but assured, details of the deal are being hashed out as you read this and sources are coming forward to secretly divulge some of the more critical aspects of the plan. The newest tidbit comes from an unnamed source familiar with the negotiations speaking with Reuters who said that GM's Chapter 11 filing would create a new company comprised of the General's positive assets and will be initially owned by the U.S. government. The report lends further credence to the "good" GM, "bad" GM plan we've been hearing about for weeks, with one company taking on all of GM's deficient assets and another separate entity comprised of the positive assets, the latter of which could honor the claims of secured lenders, possibly paying back most or all of the money owed. But what about the taxpayer loans?

Reuters' source indicated that the new government strategy for GM would include extending the U.S.' credit line to the newly formed company and forgiving the majority of the $15.4 billion federal loans to the automaker. Additionally, the government could give both bondholders and GM's unions a stake in the company, and although a new board would be established – pending review from the government's oversight board – Rick Wagoner's successor and GM's new CEO, Fritz Henderson, would likely head the new company. Shocking? Hardly. Disturbing? Sound off in the comments below. Thanks to all who tipped in.

[Source: Reuters | Image Source: Bill Pugliano/Getty]


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    • 1 Second Ago
  • 95 Comments
      • 5 Years Ago
      Here's an idea, Obama : Use logic... let GM fail on its own. We all know it will, even if you do decide to take ownership of it. (and I think you have a inkling suspicion that even in your hands it will fail) Therefore, to avoid making you and the entire government (and intern, America) look bad, I recommend that you leave this whole ordeal, which isn't helping anything anyway, to free markets and capitalism. ( who knows, someone out there may actually get them out of this mess ;) I think that if you let them fail on their own, America probably would be a little less financially scarred, then if you and your buddies tried to save them.


      / just an idea....
        • 5 Years Ago
        Great idea. But a lousy plan. Here's why...

        First, you put 266,000 GM employees around the world out of work. They all hit the social insurance system all at once exasperating an already over-taxed slow moving government bureaucracy.

        Next, the suppliers and support agencies that thrive off of GM start laying off their unneeded employees swelling the unemployed numbers to well over 1.5 million. Then the social insurance offices get hit once again.

        But now, companies that depend on GM for their existence start to file for bankruptcy as well.

        Furthermore, the same companies that file for bankruptcy also serve Ford, Chrysler and even Toyota which are severely impacted by the loss of parts and service organizations. Chrysler would likely collapse entirely further endangering the entire economic system.

        What bank would lend to any auto manufacturer at this point? The answer is none. Credit would freeze even tighter than it has been up to now. Auto loans would be history. All of them would be recalled. Cash would be king and nothing else would do. Banks would no longer pay interest (because they couldn't do so any longer).

        Let's not forget that all that tax revenue generated by the laid off employees and the bankrupt companies would be entirely lost. That means those who are lucky enough to still have a job elsewhere in the economy would have their taxes increased substantially to pay for all the malaise. We're talking taxes in the range of 60% like in Sweden, and that is just to maintain the current economic free fall that we are experiencing.

        Have a nice day!
      • 5 Years Ago
      That's not enough information. What happens to stock holders? Buy out?
      • 5 Years Ago
      the nationalization of america....
      • 5 Years Ago
      Typically I'm not worried by things like this...but I have this reoccurring nightmare of a bitten-in-half-jelly bean-shaped Corvette with a wheezy hybrid engine and a 10 second-plus 0-60 time that costs $200,000. Maybe I'm crazy, but based on my experience with government-run projects, that's as high as my expectations get.
      • 5 Years Ago

      If you don't like this GM deal, buy a Ford. It would be the best way to show your disgust for what is possibly going to happen to GM.

      Give your hard earned money to the company that will soon be the underdog. How many government contracts do you think Ford will get in the future? Slim to none. So, for doing all the right things, having great new products and not taking govt money, Ford will soon be screwed if this proposal is approved. The govt will not let GM fail if they take ownership. They'll have a horse in the race and they'll do whatever they need to make it a winner.

      Have you driven a Ford lately...you need to.
        • 5 Years Ago
        "If you don't like this GM deal, buy a Ford." ~ KT

        Or any car you want from any manufacturer not begging for government bailouts. Let economic freedom ring.
      • 5 Years Ago
      HAH! All of you on AB are wrong! GM (Government Motors) will now make that super efficient car that gets a gazzillion miles to the gallon, can be driven into a bridge abutment at 60 MPH without hurting anyone and it will cost only about 6k. It will also be built with recyclable materials. All is well!!!!!!
      OBAMA!!!!
      • 5 Years Ago
      and why don´t they just buy Toyota instead of GM?

      It would even cheaper!!
      • 5 Years Ago
      Alright - so if Uncle Sam owns GM, as a tax payer do I get a cut of the profits? I expect a check in the mail quarterly. Do you hear that Mr. Savior obama?

      If they are willing to print 15.4 billion dollars worth of money, is every other crap run business going to run itself into the ground and be absorbed into the US Gov?

      This is going to set a terrible precedent - they should have told the auto industry to F off let it burn to the ground and then rise up leaner/meaner/smarter.

      • 5 Years Ago
      I would like my shares please. After all i paid for them. :)
      • 5 Years Ago
      Parts for Goverment motors
      1 ea spark plug $400.00
      14.5 B could build a very nice freeway...what mental giant thought they could make this company work... Oh yah Savior Obama
        • 5 Years Ago
        Cost of Iraq war $670 billion, not trillions. Facts are your friend:
        http://costofwar.com/
        • 5 Years Ago
        @ Venom, whatever your opinion of the Iraq war is, it is most definitely not a "fake" war.
        • 5 Years Ago
        Imagine the freeways we could have built with $694 billion!
        • 5 Years Ago
        Venom (good name)
        Maybe you should move to Canada or France
        I guess you would rather leave the terrorist walk all over us
        I remember 9/11 do you ???
        • 5 Years Ago
        I wish I still had the link, but Iraq AND Afganistan have cost us less than 5% GDP yearly. WWII was about 20% GDP. Half for the European part of the war and Germany had not attacked us. When we are spending that kind of money, then come back and complain.
        • 5 Years Ago
        I guess trillions on a fake war in Iraq was okay for you though.
        Hoo Rah.
      • 5 Years Ago
      well well well... we are in the pits now.
      • 5 Years Ago
      If I was Ford I'd be asking for my $15 billion of free money. Not fair otherwise.
        • 5 Years Ago
        Ya as long as no strings but ya I agree...
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