• May 22nd 2009 at 12:58PM
  • 43
According to The Washington Post, the White House is readying General Motors for a bankruptcy filing that could come as early as the end of next week. According to the paper, the proceedings would likely grant GM nearly $30 billion in additional federal loans, bringing taxpayer investments into the company to almost $45 billion.

As reported earlier, the plan appears to be to give the government a 50%+ stake in The General, with the White House gaining the ability to name new board members, as it has with Chrysler, which is already in Chapter 11 status. The United Auto Workers VEBA health care fund is tipped to own nearly 40% of GM itself, a stake it would receive in exchange for giving up the $10+ billion it is already owed. That would only leave around 10% for the bondholders, who remain none too happy about the situation.

Full details available at the link below.

[Source: The Washington Post | Image: Bill Pugliano/Getty]

I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.

    • 1 Second Ago
      • 6 Years Ago
      I may be quoting Captain Obvious, but Ford is going to gain SIGNIFICANT market share over the next few years.

      GM and Chrysler will be fine, for now. As it stands, they'll be a shadow of their former selves for the foreseeable future.
        • 6 Years Ago

        Keep in mind, they will be competing with two oranizations.

        The union which they also employ.

        The government which also regulates them.

        Those to organizations are going to hold and control what remains of GM and Chrysler, Ford's domestic business competitors.

        I am not so sure that Ford is throwing a party about this. They have their back to a wall, and are being surrounded on the other three sides.

        That isn't really a place I would want to be. The sad part is, the tax-payer is being similarly surrounded.
      • 6 Years Ago
      What confuses me is the haters that want to see Chrysler and GM fail knowing that they have received billions of taxpayer dollars. Now, saying that. I recently and this is very recent within the past 30 days, purchased a 2009 Jeep Grand Cherokee SRT8. It is an extremely beautiful vehicle that everywhere I go people ask me "What the hell is that? That is a beautiful car!" Why did I take the time to say this? Because i constantly hear people here saying that Chrysler does not make cars than people want to buy, when according to sales they are only behind GM, Toyota, Ford and Honda. That is very impressive if you ask me. Additionally, the dealership where I purchased my car in Easton, Maryland had a lot full of people looking to buy Chrysler, Dodge and Jeeps "Knowing" the company is in bankruptcy. So all the nay sayers, I do hope that you are wrong, but to say that they have nothing people want is just plain wrong. Mopar & GM forever!!!!

      My Cars: (All American and All Running Strong!)
      2000 Jeep Cherokee
      1998 Eagle Talon TSI
      2000 Dodge Neon
      2009 Jeep Grand Cherokee SRT8
        • 6 Years Ago
        The problem we have with it, Mik, is that we will NEVER see our money back. Thus, we did not loan them money.............. we GAVE them money. Or, to put into simple terms............. we rewarded failure and gross incompetance.

        Mind you, I don't entirely blame Chrysler for this. I blame Diamler for raping the company, and leading to this.

        GM, they have only themselves, and their arrogance to blame. Yet, they are being rewarded. However, they will still have the UAW (btw, I do not begrudge the auto workers, as anyone would try to get all they could, just the leadership, and the combative mentality), they will still have their toxic corporate structure, and they will now also have the government. Oh goody.

        So yes, in their case, we did throw away money. Money that my 7-year-old will get to pay for.............. along with all of the other ridiculous BS money that is being thrown around by this administration............... including, but not limited to, bank bailouts, auto bailouts, budget that is anything but, and the stimuless package.
      • 6 Years Ago
      I think GM will make it. They already have small cars and new vehicles in the pipeline. Chrysler really doesn't have anything, and they are saying it will take 18 mos. to get Fiat to US standards... and then it's convincing Americans to buy Fiats! I think liquidation is coming for Chrysler...

      • 6 Years Ago
      For all those cheering for GM to fail, Obama now has $45 billion of your dollars wrapped up in them.

      I suggest we all become cheerleaders of GM now and at least hope for some payback.
        • 6 Years Ago
        Sounds like a good deal to me :=)
        Lets look at this deal
        We give GM 50B $ and get 50+% of the company
        Union gives up 10B$ and gets 40% of GM
        Amazing how giving union money for the election of Obama helps them
        get 40% ownership
        I love this administration
        Do you smell something bad.... I know I do
        • 6 Years Ago
        Generally, I don't see what's so bad about the employees owning the company. Granted, I generally hate the UAW's tactics and they've been bellyaching for years that they could run the company better. So now they get their chance. If they succeed, they can sell off their shares like planned to fund the VEBA. If they fail, they lose everything and they've got no one to blame but themselves.
        • 6 Years Ago
        Agreed. I don't understand this "they took bailout money so i'm never buying a car from them!" attitude. If everyone has this attitude, it ensures that your tax dollars are gone forever!

        I'm not saying you need to buy a GM car out of charity, but if they make a car you want, not buying it to spite them is really spiting yourself because you're just making it that much less likely that they will pay your money back.
        • 6 Years Ago
        Jimbo - the problem is the bond holders of GM. Bankruptcy law was re-written during FDR to prevent these type of sweetheart bankruptcy filings. Don't kid yourselves - that what is happening. A sweetheart deal that screws the ond holders.

        GM's bondholders aren't just limited to a few big private equity (hedge) funds like Chrysler's were. They are held by a vast number of pension and mutual funds who took the lower return on GM bonds because they were assured a higher ranking of the firm's creditors should the firm default. You really can't re-write the rules in the middle of the game and expect people to keep playing the game the same way.

        "Indiana Treasurer Richard Mourdock revealed this week that his state’s police and teacher pension funds have lost millions of dollars in the Chrysler “restructuring.” Indiana’s State Police Fund and Major Moves Construction Fund, which finances roads and bridges, together lost more than $1 million. And the Teacher’s Retirement Fund “suffered, at a minimum, a loss of $4.6 million due to the action of the Federal government,” reports Mr. Mourdock."

        Expect that response 100-fold if the same is tried with GM.

        I thought the logic behind using TARP money to prop up GM was to avoid bankruptcy. What did we get for our money, exactly?

      • 6 Years Ago
      The Obama administration is not going to be happy till they ruin the auto industry period. The Russian mafia would have given a more fairer deal to Chrysler and GM.The bond holders are getting screwed and the govt.and the unions are getting control of GM. Was it not the greedy UAW that started the demise of GM.Now they will be running GM with the help of the govt.You got to be friggen kidding.Communism or socialism take your pick.
        • 6 Years Ago
        with the illusion of stock ownership shares, it would be socialism.

        If it were communism, the government, er Political Bureaucracy, or Polit Bureau, would declare the industry property of the state, with no other owner but the people, and by the people, they mean solely themselves, with the actual people ALSO being property of the state.

        -"private" profits that get taxed by the government after the people have the token period of time to "hold" their money a bit, with public-borne economic losses is socialism.

        -No profits because they are evil, and the government doesn't even let the people "hold" the money, and public subjugation would be communism.

        Those are both economic systems, and usually occur in that order.

        But the government actually enacting those controls on people is fascism and autocracy, sometimes referred to as totalitarianism once it becomes 'total' control. Those are political systems that go along with the economics.

        The nanny state is always followed and enforced by the police state.
      • 6 Years Ago
      I hope you Obama voters are happy with the transfer of wealth to life's losers and their losing companies.
        • 6 Years Ago
        @2xtrbo: I'm glad that President Obama is not going to take a cheery, do-nothing attitude toward the economy like his predecessor did. He is going to stick his neck out and make hard, unpopular decisions for the LONG TERM benefit of everyone. He's manned up and noted that his actions and his success will determine if he gets re-elected to a second term.

        Now, are we going to step back and see if there's a rejuvenated GM and Chrysler in about ten years, or are we going to sit back and piss about every car-related thing that goes south in this already crappy economy?
        • 6 Years Ago
        to Americans vs a 600B hole in the sand. yes. i'll gladly have my hard earned tax dollars tossed into an American made hole that affects American’s livelihoods instead of ditching 10x the amount in a hole in the ground. I don't care for either option, but one is vastly more preferable.
      • 6 Years Ago
      Long live the U.S.S.A.!!!
        • 6 Years Ago
        If you weren't saying that last fall, don't whine about it now.
        • 6 Years Ago
        Many of us were saying it, as loudly as we could.

        Whether other people were, or were not, now makes no difference.

        These are going down the road to become nationalized car companies, in a socialist nation-state. FACT.

        previous acceptance or defiance is immaterial at this point.
      • 6 Years Ago
      to Americans vs a 600B hole in the sand. yes. i'll gladly have my hard earned tax dollars tossed into an American made hole that affects American’s livelihoods instead of ditching 10x the amount in a hole in the ground. I don't care for either option, but one is vastly more preferable.
        • 6 Years Ago
        Get a clue, man

        Tax dollars down a HOLE affects American's LIVELYHOODS.

        I didn't screw up GM or Chrysler. I didn't strike or threaten it, to get MUCH higher than market value labor prices and legacy costs.

        I didn't even wrap them up in red tape, or design marginal cars for the last few decades.

        But what I am doing... is paying the damn bill, because the government makes me. If I don't pay, I go to prison at the muzzle of a gun.


        I didn't lend money to people who couldn't pay it back, like the banks did, at the behest of the government and their appendages, Fannie and Freddie.

        I didn't run the state of California into the ground.

        I didn't drive up the cost of health care by making it uncompetitive with single-payer government programs like medicare and prescription drugs.

        I didn't create the ponzi scheme that is Social Security, that probably gave Madoff the idea to try it for himself...

        I didn't vote to print money with nothing to back it up.

        I didn't vote to overspend the federal budget more than any time in history, by several orders of magnatude.

        I spoke OUT AGAINST those things.

        And again. WE, the taxpayers, foot the bill.

        Where the hell do you think tax dollars come from? What the hell do you think printing more money for deficit spending is going to do with the few dollars the government deigns to let us keep?

        What do you think 3.5 more years of this sort of government is going to ADD to that burden, let alone if this lunacy is allowed to continue after that...

        You talk about American Livelyhood being supported.


        There are more americans than just auto employees, and this is hurting EVERYONE, except maybe the 535 legislators, the white house, and the supreme court, and assorted other MORONS in washington.

        Sinking a big ship to bail out a smaller ship is not a net gain, and when the big ship sinks, the smaller ship goes down, too, anyway.
      • 6 Years Ago
      GM is American shame.
      Chrysler is American shame.

      Greedy mind cornered a financial condition of GM in the bankruptcy.
      How much will the company intend to absorb the tax of the tax payer?

      Americans people like changes, doesen't them?
      The American should change it early without clinging to GM forever.
      • 6 Years Ago
      I really hate seeing all this happen. GM and Chrysler (and Ford) made some great vehicles while all the Subaru drivers were saying American vehicles were junk, without even taking a look at them. I've also got a pair of Jeeps. a 90 YJ and a 02 TJ that are both exceptionally good vehicles. I use Fords at work, and there good too. My last foreign car was a 84 Toyota (also a fine vehicle). When our Domestic auto industry dies, it's not likely to come back. The transplants are here only out of a fear of protectionism, and when our domestic industry is gone, the transplants will producing in China for USA consumption, just like every other industry.
      Yeah, the GM and Chrysler brass sucked big time. Softball question from congress: Will you work for a $1 a year(and implied enormous huge stock options)?. Answer from brass: "I'm good where I'm at". and "what he said".
      Re: "huge legacy costs" or "all that money going to the Union". This is compensation that was promised and earned over the last 50 or so years, WHICH WAS NOT FUNDED. If GM hadn't paid their electric bill for the last 50 years (and the power wasn't shut off), that would be a huge number too. Most people actually know this, but they (for whatever reason) insist on spouting the talk-radio spew of the "All that money is going to the Union" non-sense anyway.
      Semi-shuttering the plants for a few months until the economy picks up, with the Fed simply providing bridge loans (since the repeal of 1933 Glass-Stiegel trashed our financial system)for some realistic period of time 6-9 months, would have made more sense than selling assets for 5 cents on the dollar, paying TARP money to AIG insured bond holders, re-orging the dealer network, and deciding that the "task force" knows better what Americans want to buy. The model lineup is actually pretty good as it is, including what was already in the pipeline.
      Oh well, get use to looking for the "Made in China" label.
      • 6 Years Ago
      Zamafir -

      60B is a down payment. If you thinks the end, you need to look around. And I don't think you counted GMAC is that amount.

      Yet to come - justify universal healthcare to 'help' america's industry.

      BTW - I love your pan-flute.
      • 6 Years Ago
      So guys, who do you think is going to come out on top..... GM or Chrysler.

      Come out on top, I mean as a stronger company.
        • 6 Years Ago
        Wait GM's still a company?

        It looks like it is now a government subdivision to me.
        • 6 Years Ago
        GM may survive. Chrysler won't.
        • 6 Years Ago
        GM has a few competitive products out there (trucks,Enclave & Friends, Malibu) and appears to have continued to work on new and improved products (Cruse). They also expect to continue to leverage Opel (GM will remain as an ownership partner), Holden and Daewoo. Put it all together and they have a chance. Unfortunately Lutz had everyone focused on the smoke and mirrors of the Volt being the big saviour. They need to put the focus back on their meat and potatoes everyday vehicles. I can't wait to drive a Volt too but all the chatter about it hasn't made me want to buy a Cobalt.

        Chrysler on the other hand is an automaker without a lineup. Their current lineup isn't competitive. The worst part is very little is baking in the oven in Auburn Hills and now with Fiat incharge what little was being worked on will be scraped. Their "saviour" is a minimum 18 months away from putting any vehicles in showrooms. This is a company that has to survive 18 months in the worst possible economic climate with some of the worst negative press and a out of date lineup of vehicles everyone realizes are going to be orphans soon. Even when the Fiats arrive it is somewhat doubtful how many customers will return to Chrysler showrooms to buy warmed over Fiats. The few customers they have right now have been mostly based on price/value. The Fiatslers will quite likely cost more and the existing Chrysler customers are so upside down in their vehicles it will be hard for them to trade up. I am no expert on Bankruptcy but I suspect Fiat may let the new Chrysler go Chapter 7 and simply buy the assets it wants to keep.

        I would bet on GM if they can axe most of their management and get someone with some business sense in.
        • 6 Years Ago
        Oh, thought you meant on top of the mass grave before the taxpayers fill it in using a $50 billion bulldozer.
    • Load More Comments
    Share This Photo X