Sunday, May 3, 2009

G.M. Bankruptcy More Likely Now?

The Chrysler bankruptcy may make it a more appealing option for President Obama as he attempts to reform G.M., according to The New York Times:
No one thinks Mr. Obama is going to allow G.M. to be broken up, its assets sold or abandoned.

But if the Chrysler legal process unfolds as the White House hopes it will in coming weeks, the bankruptcy option may look increasingly attractive for G.M. as well, officials on Mr. Obama’s automotive task force said. Bankruptcy may also be the only way to force the kind of paring down that Chrysler, with a third of G.M.’s workers and half the number of plants, did not have to endure.

“The threat of bankruptcy is very important in the negotiations with the bondholders and the dealers and others,” said David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “Without a clear and present danger to them, they won’t make a reasonable deal.”

1 comment:

  1. I have no sympathy for the *personal* careers of the already-rich bankers and others who shepherded the various bond investments in Chrysler. I do however have a lot of sympathy for those middle-class folks who indirectly hold supposedly asset-secured bonds, and now are to be thrown under the bus by the administration.

    It's unlikely, but it'll be creatively amusing if Judge Gonzalez refuses to play his part according to Geithner's script.

    Any such eventuality would make the outlook for GM much more interesting.


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