By on August 25, 2012

GM must feel like well-to-do Eurotrash coming to America: Lots of cash in the bank, but lousy credit. GM wants to change this and is talking to banks about doubling its $5 billion line of credit, the Wall Street Journal says.

GM currently sits on a $33 billion cash pile, far in excess of the $20 billion analysts believe it needs to operate comfortably. Says the Journal:

“But GM could have hefty cash needs ahead. Its European operations are racking up major losses, it is increasing capital spending on new vehicles, and it may want to repurchase shares held by the U.S. Treasury. GM also wants to reduce its U.S. pension obligations. Pensions for hourly, union workers and retirees are underfunded by about $10 billion and have been a major concern for investors.”

GM secured a $5 billion revolving line of credit in 2010.  Ford’s line is $9.3 billion.

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10 Comments on “GM Wants A Bigger Line...”

  • avatar
    Polar Bear

    “A fool and his money are soon parted”. To which should be added: “Especially when he lends money to General Motors”.

  • avatar

    T sat that GM Has all this cash is to say that a person has $50000.00 in the bank ,but owes his credit cards $75000.00.When Fitch raised GM’s bond rating their press release stated that $ 20 billion had to be maintained or GM was at risk to have their rating lowered.Selling bonds and lines of credit ( not to mention culpable mismanagement)led to the first downfall.Is there really any difference today from then ?

  • avatar

    I probably wouldn’t recommend you or me to loan them a bunch of money, but if I was running one the TBTF* banks I am not sure what the risk would really be.

    *Thank you Mr.Bernanke and Mr. Geitner. And, of course your 55th floor window office awaits when you decide to take a few years off in the private sector…..

  • avatar

    GM still owes taxpayers billion of dollars. Pay it back.

    I will never purchase a GM vehicle because of what they’ve done.

    It’s disgusting that that executives did not take the responsibility for their piss poor decisions over decades and been forced to file bankruptcy so they were on the hook for their decisions.

    • 0 avatar

      I was no fan of saving GM, but it’s done. The cost is sunk.

      Furthermore, from a ruthless free market perspective, buying GM is OK IF you consider the purchase the best value. (IMO, the Silverado is the best value in its class). After buying a GM vehicle that’s the best value for you, use the $$$ saved to elect politicians who will put down future diseased firms when markets so dictate.

      • 0 avatar

        If GM did the hard work required of a real bk, you would have a point. But then, if GM did the real work to begin with, they would not have found themselves in a position to go bk in the first place.

        Their faux bk fixed little other than rewarding the destructive behavior that got them there and wiping away debt they legitimately owed.

  • avatar

    Not sure $5B will cover it. Every GM dealer I walk in to has the techs up to their elbows in warranty V6 fixin. What POS.

  • avatar

    So company goes bankrupt and secured bond holders get trashed. But taxpayers still on the hook to pay additional 10 billions of US dollars to provide pensions and comfortable lives to those who bankrupted the company in the first place and did not take any responsibility. So they sucked out tens of billions $$ first time and still not satisfied. Doesn’t it remind you Underworld? But yes – everybody, let us help union thugs to elect you know whom for the second term of you know what because they will desperately need him.

    • 0 avatar

      “So company goes bankrupt and secured bond holders get trashed.”

      GM’s secured creditors were paid in full. So, not really.

      Strike one.

      “But taxpayers still on the hook to pay additional 10 billions of US dollars to provide pensions and comfortable lives to those who bankrupted the company in the first place and did not take any responsibility”

      One of the benefits of the bankruptcy is that it kept the GM pensions out of the PBGC. Had GM liquidated, then the taxpayers may have had to dump cash into the PBGC, given the size of the hit, but that didn’t prove to be necessary thanks to the bankruptcy.

      Strike two.

      “Doesn’t it remind you Underworld?”

      Not really, no. Strike three, you’re out.

      • 0 avatar

        I never lived in you little happy world of crony capitalism so I do not care if you kick me out. If bond and share holders were treated so well in GM bankruptcy then go and invest into GM shares or loan them your personal money. You will be rich guy (if not already). But leave me alone with my hard earned money.

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