Quote:
Originally Posted by PhishPhood
This is a 'damned if you do', 'damned if you don't' conundrum.
If the Feds give GM/F/C $50 Billion in loans then the Treasury better be damnwell certain that none of the three take the money and then go BK the next day. Legally it/we would just be another creditor in line with the rest of the creditors hoping for a nickel on a dollar return. Where would that $50 Billion have disappeared to? Who's pockets?
OTOH if the three do go BK first with the expectation that there will be a $25 - $50 Billion bonanza waiting for them when they come out of BK court in 2-4 yrs ( see Delphi ) then the creditors will refuse to negotiate a settlement.
|
In the loans to Chrysler in the 80's, the US Government made themselves the #1 creditor who would receive their money back if Chrysler had failed ahead of all and any other creditors. At that time the loan (about 1.5 billion if I remember) was actually backed by enough real assets that the Governments money was quite safe.
I have no idea if this is possible with GM/F/C now or how the Treasury Department would handle a loan/bailout now; but they will not take some safeguards for sure. They won't let the companies just say "chapter 11" and keep it. Nor do I think GM/F/C would want to do that.
The unfortunate part is no one talks about why all three domestic manufacturers have ended up here or how to change the competetive landscape. Without curing the industry, we are dumping money into a big hole.