Obama Administration Files Bankruptcy For General Motors
Everyone is saying that “General Motors has filed for bankruptcy today,” but let’s be honest. Obama is calling the shots.
So long General Motors. Hello Government Motors.
Under the proposed restructuring, about 60 percent of the new GM would be owned by the United States, about 12 percent by the governments of Canada and Ontario, a union health trust would own 17.5 percent, and the company’s current bondholders would get 10 percent.
The United States will invest another $30 billion during and after the GM bankruptcy process, officials said last night, bringing the U.S. commitment to $50 billion.
Following that infusion, “the U.S. Treasury does not believe or anticipate that any additional assistance to GM will be required,” a senior administration official said last night, calling the restructuring a “permanent” solution.
So, much as with Chrysler, the federal government and Obama’s political supporters at the UAW get a bigger chunk of the pie than the bondholders even though the bondholders had a greater portion of GM’s debt. Wonderful.
The question that nobody seems to be asking, though, is why General Motors had to be “guided” into bankruptcy by the federal government. Back when the auto industry bailouts were first being debated, weren’t we told that we had to save these companies from bankruptcy? That they were “too big to fail?” Now, suddenly, the government gets involved and it’s ok for General Motors to be restructured?
General Motors was never in danger of ceasing to exist, I think. The company could have filed bankruptcy and restructured on its own without any need to burden the taxpayers. What was in danger of happening, though, was the UAW having its labor contracts with General Motors seriously diminished should the company have restructured on its own.
Thus the extra-special, government-guided bankruptcy. Not for the good of the country or the economy or even General Motors, but rather the good of Obama and his political supporters.
