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Uncle Joe, Uh...Obama didn't bail out the auto industry
Politico ^
| 12/2008
| Politico
Posted on 10/12/2012 5:59:51 AM PDT by jilliane
12/2008 President George W. Bush stepped in Friday to keep America's auto industry afloat, announcing a $17.4 billion bailout for GM and Chrysler, with the terms of the loans requiring that the firms radically restructure and show they can become profitable soon
TOPICS: Politics
KEYWORDS: 2012debates; auto; automakers; bailout; bho44; biden; debate
Agreement w/the auto bailout or not, it's just wrong that Biden took credit for this in the debate last night. Do the good people of Michigan not remember what happened?
1
posted on
10/12/2012 5:59:54 AM PDT
by
jilliane
To: jilliane
Geez, you guys and your details... :)
2
posted on
10/12/2012 6:06:15 AM PDT
by
vet7279
To: jilliane
But the Bushmonster stole the money from the workers and not the $150,000+ a year elites that oppress the people!
3
posted on
10/12/2012 6:06:38 AM PDT
by
Dallas59
(President Robert Gibbs 2009-2011)
To: jilliane
And it was stupid when Bush did it.
4
posted on
10/12/2012 6:08:14 AM PDT
by
bmwcyle
(Corollary - Electing the same person over and over and expecting a different outcome is insanity)
To: jilliane
5
posted on
10/12/2012 6:09:54 AM PDT
by
SampleMan
(Feral Humans are the refuse of socialism.)
To: vet7279
Yep as Obama said
GM Lives and Bin Laden is dead ( and so is our Ambassador)
6
posted on
10/12/2012 6:10:12 AM PDT
by
uncbob
To: jilliane
Also it was a bankruptcy. How else do you wipe out all the investors and bond holders. I would also like to hear from all the dealers, non union workers and suppliers that got wiped out.
7
posted on
10/12/2012 6:10:35 AM PDT
by
JIM O
To: SampleMan
Didn’t GM finally have a managed bankruptcy anyway, after the billions of dollars Obama gave the unions?
8
posted on
10/12/2012 6:11:33 AM PDT
by
txrefugee
To: JIM O
Also it was a bankruptcy. How else do you wipe out all the investors and bond holders. I would also like to hear from all the dealers, non union workers and suppliers that got wiped out. That's one thing that has bugged me about any discussion of how GM and Chrysler were "saved" while the mean old Republicans wanted them to go bankrupt. GM and Chrysler did go bankrupt under Obama. The argument was whether the companies would survive bankruptcy reorganization (which was never really under discussion) and who had priority over getting the assets in the reorganized corporations.
I do have one question. Can some bondholders force other bondholders to accept a deal? I know the big bondholders were strong-armed by Obama to accept a bad deal, but how would that affect someone who went to a broker and bought a GM bond (not as part of a bond fund, but as the actual holder of the bond). Since some of the bondholders "voluntarily" agreed to get less than they were entitled to under bankruptcy law, does that force other, smaller bond holders to accept the deal?
9
posted on
10/12/2012 6:24:13 AM PDT
by
KarlInOhio
(Big Bird is a brood parasite: laid in our nest 43 years ago and we are still feeding him.)
To: JIM O
Saw this the other day:
- U.S. Government buys 60% share of the New GM company for $30.1 billion - giving GM the necessary "debtor in possession" funds reserve that the court required in order to consider a Chapter 11 filing.
- The AWU's, (UAW), received a 17% ownership stake in GM, (65% in Chrysler), in lieu of the money GM owed for union health and pension commitments. At the time this equated to about 40 cents on the dollar, but in reality stock shares could be sold at levels that would not only make the health and pension funds whole - but possibly generate a profit. *Note: Unions made an initial stock sale, (a portion of their shares), right after the IPO, at a rate that generated a $4 billion profit to the funds.
- Private secured investors were given a settlement agreement at the rate of 29 cents on the dollar *Note: these "private investors" also included investment funds composed of other union pension funds, like the Federated Teachers Association - which naturally screamed murder and went to court - where they failed to find relief - looks like the Obama administration and the UAW had more clout. **It should be noted that established contract law required secured creditors be paid first, but Obama's administration simply ignored this legal requirement and gave the unsecured union creditors first position - leaving whatever might be left for the secured investors.
- Common-share stock holders were completely wiped out, when GM emerged from bankruptcy, all shares in the "old" GM were worthless since the "old" GM didn't exist anymore.
- GM was allowed to retain a $45 billion business-loss tax credit, carried forth from the "old" GM to the "New" GM - a practice unheard of in bankruptcy proceedings, essentially adding a $45 billion "gift" to off-set tax liabilities of the new company.
- Delphi, a parts supplier network and GM spinoff, had all GM debt to it cancelled. Treasury Secretary Timothy Geithner also decided to cut pensions liabilities for salaried non-union employees to expedite GMs emergence from bankruptcy.
- GM did not payback the TARP loans as their announcement appeared to say. They only paid back one particular loan package of $6.7 billion - not the $49.5 billion the announcement implied. Even worse was that GM also did not repay the loan with monies and profits from the newly invigorated company - they paid it back with more TARP funds from another TARP escrow account, none of the repayment funds came from GM monies. As of the 2011 4th quarter, the New GM has made no further TARP loan repayments.
10
posted on
10/12/2012 6:36:18 AM PDT
by
OrioleFan
(Republicans believe every day is July 4th, Democrats believe every day is April 15th.)
To: txrefugee
Not a normal bankruptcy no. The bond holders were raped.
11
posted on
10/12/2012 6:47:12 AM PDT
by
SampleMan
(Feral Humans are the refuse of socialism.)
To: txrefugee
Yes GM did enter Chapter 11 in June 2009. It was a pre-packaged fling, with an enormous amount of planned transactions already inked at the time of the filing. Shortly after the bankruptcy was filed, there was an asset sale which “sold” the arguably viable assets of the overall GM entity that entered Chapter 11 to a “New GM”. It is the “New GM” that is trading shares today, and which taxpayers hold a chunk of via the Treasury Department.
Although the issue only came up tangentially in the debate last night, it was Biden criticizing Romney for taking the position “let them go bankrupt”. Of course both GM and Chrysler went bankrupt anyway. So, the issue was a matter of when, not whether.
In fact the mistake was made by G.W. Bush, when he released TARP funds to GM and Chrysler at the end of 2008, as a lame-duck President, with the stated purpose of avoiding a December 31, 2008 bankruptcy filing by both Chrysler and GM. Bush stated that he didn't want the new President taking office with two major auto corporations in bankruptcy. The problem with that is the late 2008 funding gave Chrysler and GM enough time, given the cash burn rate at the time, to last far enough into the Obama Administration that Obama, via his car czar, could manipulate the bankruptcy to the advantage of Obama supporters (read:UAW) and to the disadvantage of white collar employees and retirees and bondholders.
The mistake has to be placed where it belongs, with G.W. Bush. had he allowed them to file on 12/31/2008 and then provided DIP funding, the situation would have played out more equitably to all stakeholders. Biden wants to claim that liquidation was the alternative, when in fact the alternative was reorganization, at a different time.
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