Today General Motors becomes the second of the Big Three domestic automakers to succumb to the recession and be placed in bankruptcy by the U.S. Treasury Department. From once employing over 1 million people, between its employees and direct suppliers, GM has fallen, now becoming the largest industrial bankruptcy in the history of the United States.
The bankruptcy, filed at 8 a.m. this morning, was carefully crafted by the Obama administration's top officials and the U.S. Treasury Department. The bankruptcy also marks the start of the largest nationalization of a corporate entity in U.S. history. The government plans to invest an additional $30B USD in GM, bringing its total investment thus far to $50B USD. In return, it will receive a 60 percent controlling ownership stake in the company when it exits bankruptcy protection.
Canada is also deeply tied to the company will also enjoy a part in the nationalization, taking on a 12 percent stake. Unions get 17.5 percent and the bondholders are handed 10 percent and the right to buy greatly discounted GM stock.
The Obama administration calls the solution "permanent" and insists that this will be the final bailout for GM. Meanwhile, it faces critics -- mostly shareholders and bondholders -- who believe it is giving favorable concessions to unions. These groups are expected to get less out of the deal, and are banding together to voice their discontent. A group calling themselves the Main Street Bondholders have formed and plan to voice their anger in court.
Rep. Jeb Hensarling (R-Tex.) supports the group, writing to Treasury Secretary Timothy F. Geitner, "The proposal seems to favor the rights and claims of the UAW, a political ally of the current administration and a powerful lobbying force in Washington, over the rights and claims of the company's diverse group of bondholders. Contractual rights of investors are being trampled by the government under the rationale of 'extraordinary circumstances.'"
Under the new plan, the U.A.W. would exchange its $20B USD in pension and retirement obligations for the 17.5 percent stake and for $9B USD in notes and preferred stock. Bondholders, which hold $27B USD in GM debt, only get a 10 percent stake and the right to later purchase discounted stock. It should be noted though, that the Bush administration similarly supported larger cuts by bondholders, and smaller ones from the unions. The cuts for both parties actually exceed those proposed by the Bush administration, which suggested a 50 percent reduction cut to the union trust, and a 66 percent cut for bondholders.
However, the complaints will likely fall on deaf ears -- similar complaints during Chrysler's bankruptcy process, albeit fewer and less organized, failed to gain traction in court.
During the bankruptcy GM plans to sell or liquidate its Pontiac and Hummer brands. It will also sell and/or spin off several foreign brands -- Saab, Vauxhall, and Opel. The Obama administration remains confident of the company's recovery, stating, "For the better part of a century, The General Motors Corporation has been one of the most recognizable and largest businesses in the world. (Today) will rank as another historic day for the company -- the end of an old General Motors, and the beginning of a new one."
quote: I think a lot of the Obama bashers should really go back to elementary math class, because adding 1 to 3 million people to the unemployment line is going to cost a hell of a lot more than the bailout !!I guess the Obama bashers would of rather had his administration add 1 to 3 million extra people to the already growing unemployment line; but then again these same people would then turn around and bash Obama for not stimulating the economy and creating jobs!! PATHETIC !!
quote: guess the Obama bashers would of rather had his administration add 1 to 3 million extra people to the already growing unemployment line; but then again these same people would then turn around and bash Obama for not stimulating the economy and creating jobs!!
quote: A 31 year old who has never set foot in an auto plant is in charge of dismantling GM in his first government job.
quote: the U.A.W. would exchange its $20B USD in pension and retirement obligations for the 17.5 percent stake and for $9B USD in notes and preferred stock.
quote: some Americans are so dramatic, thumping their chest, & rubbing it in everyone's face. I am an African American, but some Americans go way to far waving their flags, always spewing how great the US is compared to every country
quote: 16th. United States 15.4%
quote: I agree, some Americans are so dramatic, thumping their chest, & rubbing it in everyone's face.
quote: You don't know me, so I don't want to change anything, I live life, let live, & mind my own business.
quote: Here's the thing, & I think many minorities agree with me.
quote: I know this is a great country & I don't have to do the things I mentioned in my earlier post like some do by rubbing it in everyone's else face displaying this attitude
quote: I do believe you can be Patriotic without all the theater that you see out there especially on FOX News.
quote: I don't want to change anything,
quote: Wish there was a way to make them share the cost.
quote: Notice how 90% of your population lives within 80 miles of US border or something thereabouts?
quote: Many of them are old enough to remember the USSR and before the wall fell.
quote: ld enough to remember
quote: Call it a bailout, but a government forcing an ownership change and giving it to the people sounds like Marxism to me.
quote: What me worry?
quote: Blame it on the SUVs and Trucks
quote: If the US automakers were building hybrid and EV then they would not be in this situation.
quote: but I think its more likely that production has just caught up.
quote: Six months ago there was a five month wait on a new Toyota Prius. I know because I asked a dealer.
quote: Yeah, more like he didn't have any on the lot that day and was fueling the hype machine.
quote: They were buying used Prius and selling them for MORE than new list. Not hype as you say, but real supply and demand issues.
quote: Nope, sorry... There was a 4 month wait in Sacramento about 6 months ago.
quote: If people aren't going to do it for themselves it is the right and responsibility of the gov't to do it for them.
quote: People dress like bums everywhere I go
quote: obviously the workers aren't doing much to move companies forward when everyone is living for CASUAL FRIDAY.
quote: and mandatory job training programs.
quote: I feel i will see the downfall of the USA with each state succeeding from the union
quote: The reliance the states have on the federal government almost precludes a full secession.
quote: He will never get a good conversation or debate with you, period.
quote: If you're going to build a proper strawman, put a little more effort into it.
quote: I feel i will see the downfall of the USA with each state succeeding from the union becoming their own small countries.
quote: I feel i will see the downfall of the USA with each state succeeding from the union becoming their own small countries. Because we will be publicly held by china and the likes.
quote: You didn't just seriously suggest that FIT should be going around asking EVERY hispanic for some identification did you?
quote: What about when pedro refuses to show some ID because he is insulted? Should FIT then dispense some of his 'murican-style vigilante justice and hand the guy a beat down while simultaneously deporting him in his cobalt ss?
quote: Hold on there man. My best friend is hispanic.
quote: So why should I give them the benefit of the doubt and assume they're a legal American?
quote: Ok if mowing a lawn or shoveling cow crap or laying down cement on a house flip is really to our benefit, than them costing millions in healthcare sticking us with higher premiums, not paying tax's, and not having the common decency to atleast learn how to say thank you to the gas station clerk they just bought some budweiser from, isnt huh?
quote: Should FIT then dispense some of his 'murican-style vigilante justice and hand the guy a beat down while simultaneously deporting him in his cobalt ss?
quote: I find it amusing that a country built solely on immigration can have so many xenophobic and ignorant people when the subject is immigration.
quote: The system is obviously broken right now, it needs to be fixed, but not socialized
quote: If you think the US health care system is fine and dandy, you either work for an insurance company, or your rich mommy and daddy pay your health insurance.
quote: I especially get annoyed by these statements. You don't have to be rich to have good health care.
quote: doesn't mean that you aren't paying out the ass for health insurance.
quote: Ok, so what is your beef?
quote: You want me to be mad that I applied myself through High School, paid for my own college with loans, got good grades, achieved in demand skills, got a good job, and have an in demand career which my employer pays the majority of my health care costs, they have a great retirement savings plan, and I get paid days off? Wow, and I thought wanting those things is what creates MOTIVATION in our society to better yourself and live above the poverty line. Or didn't you people learn that yet?
quote: Do you disagree with this?
quote: ? You think that I want you to "be mad" that you applied yourself? WTF? Are you thieving meds from the hospital you work at?
quote: That is how much YOU are paying from your paycheck.
quote: doesn't mean that you aren't paying out the ass for health insurance.
quote: Actually - I'm not paying out the ass my for my health insurance. I'm paying the following amounts every two weeks:
quote: 1. And how exactly do you propose we stop entitlements? I've paid into medicare all my life and I'd damn well better get something out of it.
quote: 3. Idiotic. Hospitals already have internal policies in place to keep this kind of abuse from happening.
quote: Can I not pay taxes on my business just because I threaten to pass the expense along to my customers?
quote: you either work for an insurance company, or your rich mommy and daddy pay your health insurance.
quote: True, I can just die (I'm fighting Cancer). But I'd rather be bad attitude alive than dead. And I mean this literally.
quote: Where Taxpayers pay to make cars that they have to pay for.
quote: Hate the new ones. Just got my GTO tuned yesterday though. 381 rwhp and 377 rwtq.
quote: A lady here at work had one and got rid of it in a few months because she didn't even have room really to bring the stuff she needed for work.