Wow, the U.S. government now owns 72% of General Motors.
The latest plan for the troubled automaker, which is expected to file for bankruptcy by Monday, calls for the Treasury Department to receive about 70 percent of a restructured G.M.
Including the more than $20 billion that has already been spent to prop up G.M., the government will provide G.M. at least $50 billion to get the company through Chapter 11, people with direct knowledge of the situation said Tuesday. By some estimates in Detroit, tens of billions beyond that amount may be required.
The United Automobile Workers, meanwhile, will hold up to 20 percent through its retiree health care fund, and bondholders and other parties will get the remaining share. Shareholders would be virtually wiped out.
So what does GM CEO and new owner Barack Obama plan to do?
Aides to President Obama have consistently said they would be reluctant shareholders, and they plan no operating role in the company.
“No one is going to put U.S. government employees on the G.M. board,” one person close to the ongoing discussions said on Tuesday.
The day-to-day running of the firm, this person said, would be left to professional managers, and the government would not be involved in decisions about closing factories, renegotiating contracts or selecting product lines.
But that may not be so easy. Already, members of Congress have been calling Steven Rattner and Ron Bloom, who are running the auto task force, to complain about the closing of Chrysler and G.M. dealerships in their states.
As factories close or move, those calls most likely will grow more intense, in part because members of Congress will have a hard time explaining to constituents how the government could own 70 percent of the company and still have no control over deciding which factories stay open and which are closed.
This could be like military base closings of the 90s, where politics trump good military strategy. The other thing is that I haven’t read of an escape plan or timeline for the U.S. government. Anyone else know how long they plan to own General Motors?
