Comments on: GM TO Raid VEBA For Cash?

By: Robert Schwartz

Robert Schwartz — Wed, 09 Jul 2008 18:52:06 +0000

Can you say breach of fiduciary duty.

By: boarder61

boarder61 — Wed, 09 Jul 2008 14:49:46 +0000

You can bet that a sizeable chunk of that loan will go in Rick Wagner’s, his cronies, and the boardmembers pockets.

The great shame in all this is the lack of planning. The Japanese, Koreans, and Europeans all have small cars to offer. They are selling them faster then they can make them. Volume sales result in profit.

One would think that a person compensated with millions of dollars each year would of at least had an inkling of foresight of this downturn of the economy.

Apparently union members are not the only GM employees who sleep at work.

By: GS650G

GS650G — Wed, 09 Jul 2008 13:17:20 +0000

All this would not be a problem if GM sold more cars at a profit. But they don’t. Here’s a tip for the UAW, the company needs to profit to pay your people. No profit, no benefits, wages or anything else.

Maybe if the UAW had GM’s profits as a priority for all these years instead of being obsessed with getting the most out of GM they could, the VEBA deal would not be necessary.

But for decades all we heard was the heartless company is screwing the workers and the bastards need to pay more.

When the tit goes dry that’s it.

By: RayH

RayH — Wed, 09 Jul 2008 08:47:32 +0000

I don’t entirely understand who would agree to loan any VEBA money to GM (the leadership of the UAW or a vote from current/retired members). I tried to read the article, but I’m not registered. If it’s up to workers/retirees, I don’t see it happening. If I’m a worker/retiree, I’m clinging on to VEBA money (even if it’s not much, it’s something) and counting on Pension Benefit Guarantee Corporation for something of a retirement in the event of GM bankruptcy. Again, it’s something.
I don’t think a lot of people realize PBGC, while a gov’t entity, isn’t a sure thing either. Fun link/read about it: http://www.frbsf.org/publications/economics/letter/2003/el2003-25.html
Of course, UAW leadership might decline to loan GM money back… THAT would be a pretty colossal FU moment… and a sign of what the UAW felt might be inevitable anyway.

By: Banned User

Banned User — Wed, 09 Jul 2008 05:17:11 +0000

6 billion dollars and one million recipients.(or whatever the exact number of GM UAW healthcare beneficiaries is) So that would be 6 thousand for each. 6 billion doesn’t seem like so much money when you break it down.

This is why 30 and out was an unworkable unrealistic scheme. GM just can’t afford to pay for 30 years of work and 30 years of retirement.

And now with China cutting their gas subsidies and the price of fuel going to rocket GM’s cash cow with the big Buicks is likely to be crippled. It just gets worse.

Their only hope is the oil price continues to fall
and people go back to buying trucks. Or they win a really big lottery.

By: eh_political

eh_political — Wed, 09 Jul 2008 01:38:52 +0000

It’s an obvious move, but were I in the UAW’s shoes, I would insist on “regime change”.

It all begs the question, who should be running General Motors?

By: ISTundra

ISTundra — Wed, 09 Jul 2008 01:18:20 +0000

It’s pretty obvious who’s going to be loaning GM the money to stay afloat -you and me. I don’t think the US gov’t will allow this former flagship of industry to close shop without a bailout (or several). The gov’t loves throwing our good money after bad. Case in point: New Orleans.

Of course, this might be after they’ve burned through the VEBA loan from the UAW, which means the gov’t will also be taking on the UAW’s pension and healthcare obligations. No doubt Rick Wagoner and his band of clowns will still be at the helm through it all.

By: hltguy

hltguy — Tue, 08 Jul 2008 22:48:08 +0000

UAW Retiree: “I am really sorry honey, I could not get the Viagra prescription because the union loaned all of our healthcare dough to GM to keep the lights on”
UAW Retiree spouse: “That’s okay sweetie, working at Wal-Mart all day gave me a headache.”

By: brids

brids — Tue, 08 Jul 2008 21:03:05 +0000

Keep fighting R.W. Make the General strong again!

By: netrun

netrun — Tue, 08 Jul 2008 20:51:49 +0000

For GM, this is the cheapest place to get the $15B they’ve already indicated they need to make it through 2009.

Right now they couldn’t get the $15B at less than 12% interest no matter which analyst they paid off. Banks are just too cash strapped to make stupid loans anymore.

And this way they don’t have to pay any insurance on the loan – another big savings.

In fact, the more I think about it, I can’t see GM NOT doing this. Sure it’s stealing from Peter to pay Paul, but hey, we’re all brothers in this together, right?

By: daro31

daro31 — Tue, 08 Jul 2008 20:43:04 +0000

Reminds me of a guy who used to work for me, stole his Mom’s Wedding ring, from her finger in the hospital to go drinking. She was dying of cancer and he just figured she wouldn’t need it.

By: yankinwaoz

yankinwaoz — Tue, 08 Jul 2008 20:36:08 +0000

I think the UAW will be better served making sure that the rest of the money GM owes to the VEBA is high on the creditor list when GM goes bankrupt.

I wonder if this same JP Morgan analyst would liquidate his 401k in order to make a few more payments on the mortgage for his upside-down (worth less than the value) house?

By: indi500fan

indi500fan — Tue, 08 Jul 2008 20:12:24 +0000

VEBA has no connection to pension fund.
VEBA is for post-retirement health care.

By: JK43123

JK43123 — Tue, 08 Jul 2008 20:07:47 +0000

partners in failure ha, that says it all.

John

By: Jeff Puthuff

Jeff Puthuff — Tue, 08 Jul 2008 19:51:53 +0000

Hoo boy! Imagine if the UAW did loan GM the money with strings attached: a new CEO, perhaps, and a new Board of Directors.

By: seoultrain

seoultrain — Tue, 08 Jul 2008 19:38:18 +0000

I can’t see anyone giving GM money in their current state. Cut production, cut costs, nix brands, kill dealers, cut Rick and most of the other execs, and maybe someone will come along and save them.

By: GE Levecque

GE Levecque — Tue, 08 Jul 2008 19:37:26 +0000

People are going to find that Health cost including Prescriptions are going up very fast, so if GM takes money from this Fund, members of it will suffer!

By: blowfish

blowfish — Tue, 08 Jul 2008 19:27:27 +0000

The sad part is like pouring water into a leaky bucket, is not gong to hold water at all.
If Red ink Rick had fgured a way of stemming the major hemmorhage helping hands could be everywhere, but watchinga rudderless oel tanker is no fun especially trying to board & help.

So how long s this VEBA money to last?

Or red ink was the guy who killed the Albatross he needed to got thats all.

By: Andy D

Andy D — Tue, 08 Jul 2008 19:26:08 +0000

OK, fast forward to 2011. GM has burned through the loan from VEBA. No white knight appears. Where does that leave the UAW membership? I thought there were laws preventing companies from looting their employee pension funds.

By: toxicroach

toxicroach — Tue, 08 Jul 2008 19:25:16 +0000

Wish the UAW had been so concerned about GM’s viability at any point in the last 30 years.

But then again, they don’t really have anything to lose. 15b doesn’t even begin to cover the unfunded liabilities so doubling down won’t hurt much.

By: psarhjinian

psarhjinian — Tue, 08 Jul 2008 19:18:50 +0000

It’s like watching a wasp land on a thistle. Someone’s going to get stung, and it’s going to be fun (well, sort of) watching it.