“GM borrows $4 billion more, prepares for bankruptcy”
I KNOW I am not the only one that sees the absolute insanity of that headline. If any of us, or any small business owner was in the position of Chrysler or GM trying to get funding, our banks and creditors would be laughing so hard, they would need to change their undies as they were slamming the door on our behinds. Instead, the secured creditors are being kicked to the curb so that the Feds and the UAW can own both these automakers, and if any of you think “we the people” are every going to be paid back, think again. I, for one, stopped buying American made cars a long time ago due to GM’s inability to honor their warranty on the vehicle that I had bought brand new, and because I am one of the working poor that cannot afford to fix a POS every couple of months, (which is what has been going on with the Big 3 for years).
There are definitive reasons why companies go under, and my suggestion to all would be to only buy Ford, (if they get their heads screwed on straight and fly right), or foreign, and tell Chrysler and GM to go take a hike if the feds are going to continue to repay political favors with our children’s and grandchildren’s money, and prop up companies that make sh*tty products. The money to keep GM and Chrysler is not going to the secured creditors who are being asked to take a bigger loss than if the companies actually filed a real bankruptcy and their assets were sold off to repay those same creditors.
At what point are we going to do a Washington DC intervention and inform our government that they can go home because their services are no longer needed? (As always, the bold emphasis that follows is mine.)
DETROIT (Reuters) – General Motors Corp on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month.
The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion.
GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete.
The tentative agreement with the Canadian Auto Workers union, if ratified, would reduce hourly compensation costs by about 28 percent after including a round of concessions the union agreed to give in March.
A day earlier, GM won similar concessions from the United Auto Workers to reduce operating costs and pay the union in stock instead of cash to fund a retiree healthcare trust.
BONDHOLDERS NEXT IN LINE
GM faces a June 1 deadline to restructure its debt and operations and has said it could file for bankruptcy if it fails to get bondholders to agree to forgive some $24 billion — or 90 percent — of the amount they are owed.
Under Obama administration orders, GM has offered bondholders a 10 percent stake in a restructured company.
A spokesman for a committee representing GM bondholders said institutional investors solidly oppose that offer as insufficient.
“It’s been a universal no from the get-go,” said Nevin Reilly, a committee spokesman. “Bondholders are being seen as speculative bad guys; but bondholders are investors, many of whom put their retirement money into GM.
Critics argue that the Obama administration has favored the position of unionized auto workers and has run roughshod over claims from other creditors in the process.
Four Republican lawmakers sent a letter of protest to Treasury Secretary Timothy Geithner on Friday saying that the Obama administration was undermining GM bondholders in order to favor the UAW, a political ally.
“We are extremely concerned that in the name of restructuring General Motors, the presidential task force on the auto industry has begun waging what some believe amounts to a war on capital,” the letter said.
“Bondholders must have a seat at the table during negotiations in how the company would be restructured,” said the letter to Geithner from Representatives Jeb Hensarling, Eric Cantor, Mike Pence and Pete Sessions.
Austan Goolsbee, a member of the White House Council of Economic Advisers and the autos task force, said GM bondholders need to recognize that they must sacrifice.
Have any of you actually spent time watching and listening to Austan Goolsbee? Austan has a running “Today’s AYFKM? Award” for attempting to stand up straight and talk at the same time.
A ray of hope though comes from three Indiana Pension funds that are not rolling over when it comes to the Chrysler Sham, since of course, they are secured debt holders and were knocked from first in line by Bambi and the UAW. Let’s see how long the “rule of law” stands with this administration.
May 20 (Bloomberg) — A group of Indiana pension funds that hold first-lien debt of Chrysler LLC objected to a plan to auction the company’s assets and said a U.S. District Court judge should rule on whether the sale is lawful.
The Indiana State Teachers Retirement Fund, Indiana State Police Pension Trust and Indiana Major Move Construction filed court papers late yesterday and today asking U.S. Bankruptcy Judge Arthur Gonzalez in New York to block the sale, claiming the plan is illegal and tramples their rights. A hearing to approve the sale to a group led by Fiat SpA, or a bidder that tops its $2 billion offer, is scheduled for May 27.
Gonzalez denied a motion by the funds to stay the sale process while they seek a review by the U.S. District Court of whether the sale is proper. The funds’ attorney, Thomas Lauria, said after today’s hearing that the group already had filed papers with the district court.
The funds also have asked for the appointment of a trustee to run Chrysler, saying the company has “ceded control over their business and their restructuring efforts to the United States Treasury Department,” which is using the bankruptcy to reward certain creditors that “the government deems politically important,” according to one of the filings.
“The Treasury Department has taken constructive possession of Chrysler and is requiring it to adopt a sale plan in bankruptcy that violates the most fundamental principles of creditor rights,” lawyers for the pension plans wrote.
There is your pesky rule of law thang, but then again this is coming from the department that is being run by a tax dodger.
President Barack Obama criticized the Non-TARP lenders for refusing to accept an offer that would have paid them about 30 cents on the dollar, saying they forced the automaker’s bankruptcy. The Non-TARP group abandoned its fight to block Chrysler’s sale plan earlier this month, citing political pressure.
Well how very fascist of The One.
And in the “his lips are moving, he must be lying” segment, Bambi on Saturday morning did a C-Span interview where he said the following:
WASHINGTON (Reuters) – U.S. President Barack Obama said in an interview released on Saturday he was confident General Motors would thrive after restructuring, but he made no mention whether the ailing automaker might have to enter bankruptcy to complete reorganization.
Obama, in an interview with the C-SPAN cable television network, said he wanted the government to get out of the auto business as soon as possible, and he said if some auto jobs never return, the government will work to ensure workers are effectively retrained.
“Ultimately, I think that GM is going to be a strong company and we are going to be pulling out as soon as the economy recovers and they’ve completed their restructuring,” Obama said.
The economy recovering will be when we all get a “dodge ball do-over”, or when the second coming actually arrives. But that being said, here are a couple of questions that come to mind…
First, how do “we” pull out of GM when the feds are going to be an owner, and secondly, if by some version of Godsmack, we are paid back, does that mean the UAW gets more of the pie?