From Larry Kudlow at National Review:
Geithner: The Fox Guarding the Henhouse?
What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.
Meanwhile, top Obama adviser Valerie Jarrett opened the door wide on CNN yesterday to bank nationalization and CEO firings.
Just in case you missed that:
“GM bondholders own $27 billion and they’re get 10 percent of the common stock.”
“…the UAW owns $10 billion of the bonds, and they’re getting 40 percent of the stock .”
The gummint kicked in $15.4 billion and gets “something close to close to 50 percent.”
And from Bloomberg:
The United Auto Workers union’s retiree health-care fund will own 55 percent of Chrysler LLC in exchange for cutting in half the automaker’s $10.6 billion cash obligation to the trust, people familiar with the matter said.
We have gone from incredible to surreal. Srsly.
May 2, 2009 at 7:14 am |
In the long run, this might turn out to be a good thing. The UAW now has more reason than ever before to make sure that GM returns to profitability. Because they have a big ownership stake in the company, they have an incentive to make concessions necessary to help the company thrive.
As for the administration awarding this largesse to the UAW, well, GM decided to dance with the devil. They took the bailout money and the strings that come with it. They probably should have just reorganized through bankruptcy.