Feds Threaten GM With $8b Bill for Delphi Pensions
Once again, former GM division and bankrupt parts supplier Delphi is proving to be the thorn in GM's side that could well prove to be a lance through its heart. Or something like that. Anyway, Automotive News [sub] reports that the feds are taking steps to sort out Delphi's pension liabilities, and The General could end up with one big ass bill. "In a letter to GM and Delphi, the federal Pension Benefit Guaranty Corp. warned it would lay claim to $8 billion if the automaker does not keep its pension plans intact, the [New York Times] paper said. This would dilute the claims of Delphi's other unsecured creditors, who are owed about $3.5 billion." To forestall that possibly mortal blow, "The U.S. government has asked bankrupt auto parts maker Delphi Corp. to transfer more than $1.5 billion of unfunded pension obligations to former parent General Motors by September 30." Whew! And here I thought we were talking about real money.
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The Oracle did not forsee this? I forsee that there are millionaires that will be just fine, and workers that are going to be screwed. Lucky for me that my 401k will protect me from bad business practices, greedy speculation and government taxation, so I'll be able to retire "worry-free". OH WAI
Cue the music from "Jaws".....
Delphi is losing a fortune; Chapter 7 is a real possibility by the 4th quarter this year. Their pension bill be GM's full responsibility by early '09. What a mess!
The millionaires who made a bunch working for or with these companies will be fine. The workers will be fine. The folks that pay the majority of taxes in this country (many are millionaires, most never will be due to the insane taxes on their most productive working years) are the ones who will get screwed. They will get this screwing from the above mentioned folks who will possibly lose a small part of their ill gotten gains. I don't see even the feds being so stupid as to force GM into bankfuptcy this way. That will make the hit even bigger for the PBGC because last I heard, GM still had not fully funded their own benefits deal with the thugs and thieves.