Bailout Watch 466: Feds Give GM, Chrysler 60 Days, $? Billion

Robert Farago
by Robert Farago
bailout watch 466 feds give gm chrysler 60 days billion

Reuters reports that the Presidential Task Force on Automobiles (PTFOA) is taking a “hard line” on the next round of federal bailout bucks for Chrysler and GM. As we’re in the political realm, “hard line” means taxpayers will fund the automakers for the next 60 days while the PTFOA rolls up its sleeves and takes greater control of Chrysler and GM’s business. The implication: they’ll force the unions and bondholders to take a buzz cut and accept a government mandated debt-for-equity swap. Oh, and re-org GM’s Board of Directors to better suit their, uh, tastes.

“We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested,” said a senior administration official, who asked not to be named.

Instead of granting GM’s request for up to $30 billion in loans, the administration only pledged to fund GM’s operations for the next 60 days while the top U.S. automaker develops an even more sweeping restructuring plan under new leadership.

GM CEO Rick Wagoner, who met on Friday with the task force, was forced out on Sunday at the request of [PTFOA Director Steve] Rattner, an official said. U.S. officials said plans were also underway to replace most of GM’s directors in the coming months.

So, instead of pulling the plug on Chrysler and GM, the PTFOA is, in effect, nationalizing the companies and THEN pumping tens of billions of taxpayer dollars into the new federally-approved automaker. It’s a hugely risky strategy, risking alienating Americans uncomfortable with government intervention. And there’s no guarantee (i.e., likelihood) that it would work.

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  • Geotpf Geotpf on Mar 30, 2009
    MikeInCanada : March 30th, 2009 at 9:02 am A question for the accountants… If you’re a GM Bond holder, just how can the Gov’t “Force” you to give up that bond in exchange for anything else - in this case GM Stock? The government just tells them to take stock or it will force GM into bankruptcy and they get nothing.

  • CarShark CarShark on Mar 30, 2009

    @jerry_weber: I think you mean Mensa. Menses is something completely different.

  • Jakecarolan Jakecarolan on Mar 30, 2009

    Thank you, Geotpf for recognizing & calling Godwin's law. It's a great one. For a while it was liberals that kept getting flagged, but now it is conservative's turn to overreact and make ridiculous claims of fascism and Nazi parallels. The pendulum swings, the pendulum swings. Also I must say I'm kind of annoyed that someone deleted my use of "gay-boy" in my initial response, which has gone unedited in menno's usage in reference to Barney Frank. I would have never used such a repugnant phrase in normal writing, but I considered menno's usage somewhat offensive and used the phrase in my comment to point out this fact. Boo-urns for ridiculing and belittling people for sexual preference.

  • Windswords Windswords on Mar 30, 2009

    Geotpf: "In any case, one of the enemies of the Nazis were, um, the Soviet Union." Actually... no they weren't. Germany and the Soviet Union had a non-aggression treaty. They were quite cooperative with each other, carving up Poland for instance after Hitler attacked on 9/01/1939. And it would have stayed that way, but for Hitler's mistake of invading the Soviet Union in June 1941. He thought it would be a quick victory, thus sealing his eventual fate.