REPORT: GM could be wholly owned by U.S. gov't after bankruptcy, $15.4 billion in loans forgiven
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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Reader Comments (Page 1 of 6)
13enS 7:07PM (5/19/2009)
Remember when "Your tax dollars at work" gave ya something to look forward to, like a wider road to enjoy?
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Minny 11:01PM (5/19/2009)
This is sad, after all the bank debts been pay, their going to forgive the loans...SAD SAD SAD....Obviously the government could of buy up GM after bankcruptcy, it would of cost less...duhh. But when big banks are involve..Ummlike cough cough J Period P Moron is involve, they lobby the government so much that they can get away with these things
Randy 12:50AM (5/20/2009)
Whatever happens I will NEVER buy a GM product! F' that... Ford is busting its azz to get things right and they have. Now GM gets an Advance To Go Card?
How the F is that fair!
Buy Ford NOT GM Spread the Word!
John B 7:58AM (5/20/2009)
Long Live Socialism!!!
Frank 8:41AM (5/20/2009)
Randy,
I understand your feelings and might even agree with them. But looking at your avatar it's obvious you're a Ford guy so you weren't going to "buy GM" anyway. There's nothing wrong about being a Ford fan, but at least be honest about it. I'd rather see what someone who is a GM fan or neutral will do when it comes to buying a future GM vehicle.
BigMcLargeHuge 9:31AM (5/20/2009)
Okay, well I am not a Ford fan. My last car was a Pontiac.
And I too am impressed with Ford, and pissed at GM.
I won't touch any of their Gov-owned products if this happens, and I'll happily give a piece of my mind to any friends or family members that do.
F big government.
Polly Prissy Pants 10:19AM (5/20/2009)
It's your tax money that owns GM (assuming this happens) so your refusal to buy from them is essentially refusing to buy from your own company. Besides, the people you're pissed at, assuming it's the inept management that drove the company to bankruptcy while collecting millions, will still keep their ill-gotten gains regardless of whether you buy another GM product or not.
MOD and ANGRY 1:01PM (5/20/2009)
@ Frank, as someone who has owned an '84 Century, an '88 6000, an '89 Sunbird Turbo Convertible (by the way, this is the only one in this list that makes me cringe), a '90 Cutlass Ciera, a '90 Century, and a '96 SL2... I am here, with a mostly favorable opinion of GM, to say "LET GM DIE!" Poor management resulting in bad products should not be rewarded. This ship has been going down for TOO long, and it needs to just sink already.
Notice that 4 of the cars in my list are all the A-Body? All American car companies are guilty of badge engineering, and if they think that's ok as a way to conduct business, then they're right to fail and no one should bail them out.
Kudos to Ford, except for destroying Volvo. I loved my S60, but god I hated how unreliable it was. That's why I drive a Miata now... 56k miles, and hasn't been in the shop once. I cannot say that for ANY other car I've owned.
Randy 4:08PM (5/29/2009)
@Frank 8:41AM (5/20/2009)
Good observation HOWEVER! I drive a Dodge Charger R/T. I buy American!!! And have had an import as well! Once!!! That was enough for me to realize that the import being better was a complete line of shizat....
larry a 7:08PM (5/19/2009)
Government Motors!
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Mike 9:24PM (5/19/2009)
hahahahaha, that's funny. I dread a government owned car manufacturer though. Will it be like government cheese? Kinda looks like real cheese but it's not...
Judy Zik 12:14AM (5/20/2009)
No kidding and not just the US government. The Canadian government will likely follow suit and end up forgiving debt for shares in the new GM.
What bothers me most about this is the relationship between our governments and GM is already way too cosy. Look at what is spent on lobbying. With governments as major share holders how much you want to bet the lobbying and the political contributions increase? Will government departments feel even more pressure to buy Chevys? What does this do to Ford?
larry a 1:55AM (5/20/2009)
If this does happen they're eventually going to sell it. They're probably just doing this to make sure everyone still has a job.
Den in IN 7:36AM (5/20/2009)
This is just another political payoff going to the unions. Take any remaining value (ok, there isn't much) from those GOP investment bankers and stock holders and give large parts of the remainder to the UAW and prop it up with billions of taxpayer dollars. Payola!
TigerMil 7:07PM (5/19/2009)
There's a reason their stock is about a buck, down from $43 a year ago....
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Gary Lowe 7:09PM (5/19/2009)
The crowning mistake of the Obama administrations one term presidency. GM, a company that makes Woolworths look pre-eminent, that after 30 years still can't build a Honda Accord, that was and continues to be the longest running Corporate sob story in corporate history now is OUR burden, our tax loss and will continue to be the poster boy for America's industrial decline.
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Venom 7:35PM (5/19/2009)
What kind of simpleton remark was that?
You probably sat there on election day thinking your candidate McCain was going to win handily and look how well that worked out.
The reality is, Obama has only been in a short time and the money that he has spent on trying to keep two American companies in business and their workers in jobs is a drop in the bucket to the money that was spent by Bush on a fraudulent war that made his friends very wealthy, especially the Vice President's former company Haliburton, not to mention the super high gas prices under his administration all of which contributed to this current mess that we are in today.
Bush was in for 8 years and two terms so why don't you give him credit for the bang up job he did.
Who 'Dis? Who 'Dat? 7:49PM (5/19/2009)
*BAM!* You hit the nail right on the had, Venom! Obama didn't create this mess, he inherited it.
And you'll also note how G.W. along with Dickie, Condie and the rest of his cronies are playing duck n' cover. Obama's solution(s) may not be the best, but then had the house been kept a little cleaner perhaps he wouldn't have to go in and try to clean this mess up!
Mario Motors 7:56PM (5/19/2009)
Why would GM want to build an Accord? It has the Malibu, which is better. Do you follow the auto industry at all, or do you just mouth off at random sites?
Bigboy 8:08PM (5/19/2009)
GM has had problems since the 1970's, not just in the last 8 years. I blame Carter.