It’s Deja Vu All Over Again

Gee, for someone who says he doesn’t want to run car companies, Obama sure seems to like to collect them.

GM bankruptcy plan eyes quick sale to government

If General Motors Corp files for bankruptcy, as widely expected, its healthy assets will be quickly sold to a new company owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who was not cleared to speak with the media and would not be identified, said the U.S. government would pay for the assets by assuming the automaker’s $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM.

The government is negotiating the terms on which it will assume GM’s secured debt and might make an the offer to holders of the debt that is far superior to the one made to Chrysler LLC’s secured lenders, the source said.

Chrysler filed for bankruptcy in April and has proposed paying its secured lenders about 28 cents on the dollar.

The new GM is likely to distribute stock in the company to GM’s unions in return for concessions on wages and benefits, the source said.

The percentage of stock given to the unions, bondholders and other creditors whose debt is not repaid by new GM has not been determined, the source said.

In addition, the government would extend a credit line to the new company, the source said.

The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

The government has given GM until June 1 to restructure its operations to lower its debt burden and employee costs as sales have plummeted in recent years.

See also:
GM shows signs that bankruptcy filing is coming
GM says still hasn’t made deals with Treasury, UAW
GM bankruptcy would be complex, painful

So, to recap, the U.S. government is going to buy GM, turn a large ownership stake over to the UAW, the taxpayers are going to take it in the shorts for the $15.4 billion of loans already made to GM, and then, to add insult to injury, we’re going to loan the new government/union owned company even more money. Can you say Chrysler redux, only on a much larger scale? Did anyone ask you if you wanted to spend tens of billions of your tax dollars to buy and run two of the three major U.S. car companies just so the UAW can keep their overpaid jobs and gold plated health care and pensions as payback for supporting Obama?

/this isn’t Venezuela, is this Venezuela?