Would a G.M. Bankruptcy Save Taxpayer Money?

Would a G.M. Bankruptcy Save Taxpayer Money?

dealbook.blogs.nytimes.com

As General Motors and Chrysler race to pull together their restructuring plans ahead of a government-mandated deadline on Tuesday, one of the top academic experts on distressed debt and bankruptcy is calling for the Obama administration to dispense with niceties and push the carmakers into bankruptcy.

If done right, the move could help ensure that taxpayers remain first in line for repayment, according to Edward I. Altman, the Max L. Heine professor of finance at New York University’s Stern School of Business.

“The question is, does the Obama administration have the courage to take that next step?” Mr. Altman told DealBook on Sunday.

(visit the link for the full news article)




[edit on 18-2-2009 by SLAYER69]

I found his next part very interesting look at some of the names

The Treasury Department — which The New York Times reported Sunday is now taking the lead in negotiating with the carmakers — already has hired an investment bank, Rothschild, and two law firms, Cadwalader, Wickersham & Taft and Sonnenchein, Nath & Rosenthal, as advisers.

dealbook.blogs.nytimes.com
(visit the link for the full news article)

[edit on 18-2-2009 by SLAYER69]

I dunno
I say let them go bankrupt then reorganize and hopefully they will come out leaner and meaner. Why throw good money after bad? IMO

I agree. You can't fix a bad business model with more money. They're going to be in the same situation as soon as the money runs out. I think the reason that bankruptcy is trying to be avoided is as a favor to the unions...who supported Obama during the election.

reply to post by BlueTriangle


I hear ya. I also found it odd that a Rothschild was involved in the banking part

hell if the govt gives me 1 billlion ill gladfully go bankrupt. let GM burn to the ground.

People were saying this before the first auto bailout loan was made to them. It was widely said that the auto bailout was only delaying the inevitable. And it turns out they were right on the mark.

Now GM wants $18 billion than they originally asked for. They say it's needed just to stay afloat, and their restructuring calls for 47,000 job cuts instead of 10,000.

C'mon Congress, what does it take before you realize this situation has already gone south? Cut them off now and be done with them!

They are starting to sound more and more like addicts looking for their next fix.
I would say give them the money if there was some sort of guarantee that they would be producing world class automobiles again and that this bailout is not just to keep them alive so that in the next 5 or so years they wont close their plants in the US to bolster their other factories around the world.

I'm afraid of them taking our tax payers money to keep their less costly over seas plants going at the expense of US jobs




[edit on 18-2-2009 by SLAYER69]

Yep, I say it's high time that the auto makers go belly up, and are forced into a structured bankruptcy. Perhaps Toyota or Honda can buy em up in bankruptcy and start forcing Detroit to make a quality car for a change.

If the Big 3 want to trim up they need to fire the UAW.

I can find at least two ideas that would not be very good for GM or Ford or Chrysler to go bust!

One would be that another 2-3 million people would be on our unemployment rolls because not only GM or any auto maker would go bust but all of the suppliers and sales and maintinance and other companies connected to that company.

Two, the possibility that the company would never be a viable entity again. All of those people who now own those vehicles loose all the value of that large purchase and the probability of keeping them running when the parts supplies dry up would be catastophic to those that have financial interests in those purchases.

The best and smartest thing to happen would be to shut the NHTSA and EPA down, dump the entrenched CEO and Boards and let companies build the cars Americans want. There are auto's in Europe that get twice the mileage, twice the performance, and are just better all around that our government won't let be sold here due to stupid regs that bere no semblence of reason. Let the market decide whats in the best interest of the citizenry, not some faceless beaureaucrat, and not micro manage those companies by regulation.

Originally posted by ZindoDoone
let the market decide whats in the best interest of the citizenry, not some faceless beaureaucrat, and not micro manage those companies by regulation.

Exactly and if they go under then so be it. Whos to say they or another company wont come out of this stronger and better organized?

What do GM promise in return? That the money won't disappear into the CEO and board members wallets? That it wont disappear as dividends to shareholders? I agree, time to take these guys out! They're nothing but a big black hole for money and now they expect the taxpayer to help keep them in the extravagant lifestyles to which they are accustomed.

MOET & Caviar anyone?

IRM

Originally posted by ZindoDoone
... that our government won't let be sold here due to stupid regs that bere no semblence of reason. Let the market decide whats in the best interest of the citizenry, not some faceless beaureaucrat, and not micro manage those companies by regulation.

Your argument here seems to be that you want the government to be less involved so that the free market can take over. Yet, you prefaced this statement by saying that the government should bail out GM which would, in essence, give politicians a direct stake in the company.

I'm a little confused by your position...

reply to post by BlueTriangle


Good point I say let them fall if there is to be an auto industry in this country it has to compete on a global scale and not be holding on the the apron strings of the government.

No. What I meant to portray is that its most likely government interference, as well as corporate malfeesense is what caused this to take place. I don't think the government should be bailing them out with giveaways but we loaned money to Chrysler before with repayment as part of the bargain and it worked. With all the new cafe type regs since that time, automakers have had to ignore what the public wanted and built what the unelected beaureaucrats told them they had to. The market for autos would not be asbad if there was a demand for the products instead of just needing transportation and settleing for whats out there. These regs made cars much more costly and uninspireing in design. Who wants to drive and upside down turtle looking car when you used to be able to buy the stylish auto that caught your eye like they used to be!

Zindo

reply to post by ZindoDoone


Thanks for clearing that up. I think that if they did a 360 and started to produce world class cars that look good ran great and are reliable I see no problem but when everybody and their brother get multi million dollar bonuses for driving the corparation through the floor I say forget it.

This is going to work guys.

I heard 50 percent of Americans are going to buy vehicles next week.



Nothing to see here!!! Please Disperse!! Nothing to see here please!!