"While we believe that GM's secured creditors may get a par recovery, unsecured creditors may get very low recovery. Equity shareholders are unlikely to get anything," said the Deutsche Bank in a report today.
GM's shares plunged by about 30% to $3.02 before rebounding to $3.37 by the middle of the morning, reports the AFP. The fall comes on the first full business day after the company's Friday announcement of its Q3 financial results and future outlook. In the announcement, GM essentially stated it would be at bankruptcy levels by mid-2009 barring government intervention.
Several pleas to Washington for help have been made, and President-Elect Obama has promised continued support for the industry. As yet, however, the Bush Administration hasn't made and clear steps toward alleviating the cash flow problems in Detroit. Since Obama won't take office until January 20, 2009, the intervening period could prove fatal for one or more of the industry's biggest companies.
A report from The Detroit News, however, has indicated that the White House may be open to the idea of further aid for Detroit. Talks with the Democrat-controlled Congress are already underway, and once those come to some conclusion the White House may be prepared to act. "Congress is going to come back into town next week," said Dana Perino, White House spokeswoman. "If they decide to try to do something more on the auto industry we would listen to them."