U.S. government pledges $30 billion in GM bankruptcy financing

It's been expected for a long time but it finally appears as though General Motors’ bankruptcy is upon us, and with it the federal government is set to bring the struggling automaker out of its eventual Chapter 11 filing with over $30 billion in financing. The news comes from White House staffers, and firmly establishes the government's newly acquired interest in GM in light of the enormous loans it has already guaranteed for the automaker. The bankruptcy financing by the government will mean that the Obama administration will have a 60% stake in the new GM, but despite owning the majority of the company the government has assured media that it will not run it as a government agency, but rather let it continue as a regular automaker first and foremost. Despite this stance, the government will be given some freedom when it comes to deciding who will be running the new GM, reports Automotive News. Under the guidelines likely to be set forth by bankruptcy courts, the White House will be able to control all seats on the current board of directors, except for one seat reserved for a director chosen by the UAW and one for a Canadian-appointed director. It’s expected that the Canadian government will be pumping in almost $10 billion into GM, which will give it a 12% stake, or around one-fifth of the U.S. government's share. With the bankruptcy restructuring, it’s also likely that GM will be forced to close a number of plants, with reports suggesting that as many as 11 will be completely shut down, while three others will be idled. According to the White House, the new GM will be much more efficient and profit will come in at lower volumes than ever before. GM’s own figures shows the automaker would currently need sales of close to 16 million units annually to turn a profit, while after the restructuring just 10 million units are expected to be needed to break even. Stay tuned as GM is scheduled to announce its bankruptcy preparations later today.

by HECTOR #1, Posted: 6/1/2009

I find this whole process disgusting and insulting. It's possible that by the end of these bankruptcy procedures the American taxpayer will have supplied GM with $50B+.

This to sustain a company that for decades has been giving a giant finger to the motorists with their substandard vehicles, with their gimmicks (like DRLs) & with their ugly designs.

And let's not forget that a lot of this money will make its way to the coffers of the UAW, an organization ran by thugs who buy golf courses, squeeze the life of GM and any other company they work for and have workmanship like they'd have in China - only they get paid 50 times more than a Chinese worker.

GM should go down in flames never to return. For many decades they haven't cared about their product - thank you Bob Lutz, may you burn in hell - and cared less about their customers. And now people like you and I, that said *thanks but no* to GM will end up paying anyway.

The only business that is *too big to fail* is the US government. ANything less should be allowed to live and die by the forces of market capitalism. Mark my words: we will be back here in 20, 30, 40 years time and then it's going to be a lot more expensive. We apparently haven't learned the *Chrysler lesson*.
by Edward #2, Posted: 6/1/2009

The above comment has my full support. And may I add: How much of that $30 billion kicks back into Obama's pocket. This the most corrupt government the U.S. has ever had. A south side Chicago street rat makes his way into the Whitehouse!!! LOL!!!! No, I'm sorry, it should be COL!!! cry out loud!!!
by NoNameDenton #3, Posted: 6/1/2009

This is just so pathetic