Bailout Watch 486: GM Looks to "Borrow" Another $4.4b
CNNMoney reports that GM is looking to stoke-up on its federal funding to keep the lights on (and the Segeways humming) until its June first bankruptcy filing. I mean, restructuring deadline. And the winner is. . . not the U.S. taxpayer. The General may take the U.S. Treasury Department for another $4.4b hit before Hune1, bringing its total to date to $17.8b, not including the $1b tip thrown GM’s way to help GMAC makes its eleventh-hour transition from deadbeat sub-prime lender to federally flush bank, and back. ALL of which will be written off when GM files for C11. And THEN, presumably, the feds will pony-up the debtor-in-possession financing to establish the new, “good” GM. As my father would say, how much is that boondoggle going to cost me?
Carmaking is an expensive business. So, I dunno, same again? More? And that $40b total doesn’t include the estimated $13.5b hit to Uncle Sam’s Pension Benefit Guarantee Corporation (PBCG). OR the unspecified amount of money the president has promised to mid-west communities to cope with the Detroit debacle. Wouldn’t it have been cheaper—and more effective—to C7 this thing and flood Detroit with economic aid? Yes.
Meanwhile, Reuters reports that GM (a.k.a. The Presidential Task Force on Automobiles) is said to be undergoing “intense” and “earnest” preparations for bankruptcy. As opposed to what? Laid back and deceitful? As if.
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MichaelJ, you skipped over a few key words in Robert's report. RF clearly states that "GM is looking to stoke-up on its federal funding....The General may take the U.S. Treasury Department for another $4.4b hit before Hune1"
Is "Hune1" a code-word for there is more speculation than news in this posting? btw NickR : April 8th, 2009 at 11:23 am said: "...could be AIG...they are both the business equivalent of bot fly larva." Nice reference. Were you reading Alfred Hitchcock paperbacks as a kid? (I remember the bot fly from a story our 6th-grade teacher read to us...)
The only bigger disgrace than GM is GMAC. Why was GMAC so special that the Federal Reserve broke the rules for them to become a holding bank AND then give them $6 billion of TARP funds? While talking a good game about loaning money to customers and dealers is really just that- cheap double talk. GMAC has been savaging GM dealers ( especially in rural areas that have newer facilities) and closing them down. Screw GM and GMAC. Both deserve bankruptcy (especially GMAC). I can't believe any GM dealer still standing continues to use them for floorplan or customer financing.