Top Republicans want GM to file Chapter 11
03-08-2009, 03:27 PM
#1
Top Republicans want GM to file Chapter 11 http://www.foxnews.com/politics/2009...re-bankruptcy/
General Motors should hand over the factory keys to a bankruptcy court, two top Republicans said Sunday.
Sen. John McCain, R-Ariz., said the best thing for the ailing automaker to do would be to go into Chapter 11 to reorganize some of its business agreements and come out stronger than before.
"I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11, they reorganize, they renegotiate ... the union-management contracts and come out of it a stronger, better, leaner, more competitive automotive industry," McCain told "FOX News Sunday."
House Republican leader John Boehner said the nation's largest auto company must demonstrate a viable and long-term business plan if it wants more federal money.
But Rep. Thaddeus McCotter, R-Mich., told FOX News on Sunday that he disagrees with sending the auto companies into bankruptcy, calling it a "shallow approach" to dealing with a failure that would affect hundreds of thousands of workers.
"If GM and Chrysler are allowed to go in bankruptcy they will not come out," McCotter said. "This will exacerbate the foreclosure crisis, it will continue to hurt the credit crisis."
President Obama's task force on the auto industry is headed to Detroit on Monday for meetings with auto industry executives from both General Motors and Chrysler, which have received $13 billion and $4 billion, respectively, from the federal government.
McCotter said he was "glad to see they are engaging in the process with the auto industry," though he expressed concern that the presidential panel has a "dearth" of professionals from the auto industry.
McCain said the Obama administration didn't make the tough choice by letting GM fail, and instead has trapped itself in spending billions on a company barely on life support.
Both companies have until the end of the month to demonstrate their ability to reduce their debt loads and qualify for more federal funding. Part of the restructuring taking place is through negotiations with the labor unions to reduce the companies' per-worker expense, which is compounded by retirement and health care costs.
GM lost $31 billion in 2008, and its stocks continue to dive -- dropping 32 percent on Friday. Company reps have said that GM needs $30 billion in total to stay afloat. The company issued a statement on Friday repeating its desire to stay out of bankruptcy court, which would likely force liquidating GM assets.
"The company firmly believes an in-court restructuring would carry with it tremendous costs and risks, the most significant being a dramatic deterioration of revenue due to lost sales," the statement reads.
Boehner said GM has avoided tough choices in the last 30 years and has to work with employees and creditors to plan a stable path ahead.
Anything short of that would be "throwing good money after bad," he said.
Democratic National Committee Chairman Tim Kaine said GM's failing can be attributed to the overwhelming cost of health care. He said that's why Obama is addressing health care at the same time he is shoring up the banks, working on a budget for next year and trying to help the auto manufacturers.
"What is probably the most cited reason for GM's difficulties -- or one of the most cited is the legacy costs on health care and retiree health care that GM has to carry that other automobile companies, particularly those in foreign companies, don't," Kaine, Virginia's governor, said.
"So the president was elected to try to deal with this health care challenge, which is -- can be a choker on the economy. ... If we can start to get that right, that can be part of growing out of these economic doldrums," he said.
McCotter said that if the automakers aren't saved that will mean the government will have to spend "$200 billion to have auto families go into the social safety net," a direct cost to taxpayers and not merely a loan, he noted.
McCotter added that the two companies are "actually restructuring" -- as compared to Wall Street's banks -- and they shouldn't be allowed to fail as they are trying to correct their problems.
"It would seem to me a very bad message to send ... that those who are restructuring will be punished," he said.
General Motors should hand over the factory keys to a bankruptcy court, two top Republicans said Sunday.
Sen. John McCain, R-Ariz., said the best thing for the ailing automaker to do would be to go into Chapter 11 to reorganize some of its business agreements and come out stronger than before.
"I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11, they reorganize, they renegotiate ... the union-management contracts and come out of it a stronger, better, leaner, more competitive automotive industry," McCain told "FOX News Sunday."
House Republican leader John Boehner said the nation's largest auto company must demonstrate a viable and long-term business plan if it wants more federal money.
But Rep. Thaddeus McCotter, R-Mich., told FOX News on Sunday that he disagrees with sending the auto companies into bankruptcy, calling it a "shallow approach" to dealing with a failure that would affect hundreds of thousands of workers.
"If GM and Chrysler are allowed to go in bankruptcy they will not come out," McCotter said. "This will exacerbate the foreclosure crisis, it will continue to hurt the credit crisis."
President Obama's task force on the auto industry is headed to Detroit on Monday for meetings with auto industry executives from both General Motors and Chrysler, which have received $13 billion and $4 billion, respectively, from the federal government.
McCotter said he was "glad to see they are engaging in the process with the auto industry," though he expressed concern that the presidential panel has a "dearth" of professionals from the auto industry.
McCain said the Obama administration didn't make the tough choice by letting GM fail, and instead has trapped itself in spending billions on a company barely on life support.
Both companies have until the end of the month to demonstrate their ability to reduce their debt loads and qualify for more federal funding. Part of the restructuring taking place is through negotiations with the labor unions to reduce the companies' per-worker expense, which is compounded by retirement and health care costs.
GM lost $31 billion in 2008, and its stocks continue to dive -- dropping 32 percent on Friday. Company reps have said that GM needs $30 billion in total to stay afloat. The company issued a statement on Friday repeating its desire to stay out of bankruptcy court, which would likely force liquidating GM assets.
"The company firmly believes an in-court restructuring would carry with it tremendous costs and risks, the most significant being a dramatic deterioration of revenue due to lost sales," the statement reads.
Boehner said GM has avoided tough choices in the last 30 years and has to work with employees and creditors to plan a stable path ahead.
Anything short of that would be "throwing good money after bad," he said.
Democratic National Committee Chairman Tim Kaine said GM's failing can be attributed to the overwhelming cost of health care. He said that's why Obama is addressing health care at the same time he is shoring up the banks, working on a budget for next year and trying to help the auto manufacturers.
"What is probably the most cited reason for GM's difficulties -- or one of the most cited is the legacy costs on health care and retiree health care that GM has to carry that other automobile companies, particularly those in foreign companies, don't," Kaine, Virginia's governor, said.
"So the president was elected to try to deal with this health care challenge, which is -- can be a choker on the economy. ... If we can start to get that right, that can be part of growing out of these economic doldrums," he said.
McCotter said that if the automakers aren't saved that will mean the government will have to spend "$200 billion to have auto families go into the social safety net," a direct cost to taxpayers and not merely a loan, he noted.
McCotter added that the two companies are "actually restructuring" -- as compared to Wall Street's banks -- and they shouldn't be allowed to fail as they are trying to correct their problems.
"It would seem to me a very bad message to send ... that those who are restructuring will be punished," he said.
03-08-2009, 03:30 PM
#2
My knowledge of how these things work is slim, but wouldn't it make sense in that it would alleviate the grip the unions have on GM? On the flip side, the effect on the economy is something we certainly don't need right now. Discuss please...
03-08-2009, 03:53 PM
#3
TECH Fanatic
iTrader: (17)
Join Date: Jun 2004
Location: St. Louis
Posts: 1,373
Likes: 0
Received 0 Likes
on
0 Posts
they have to completely restructure and the only way to do that is bankruptcy IMO. The economy isnt getting better anytime soon and they can't survive without some extreme cost cutting. What they have been doing and what they are doing now is obviously not enough
03-08-2009, 04:13 PM
#5
concern is, would people buy cars from a bankrupt company? Nevermind that they could come out of it stronger than before, people in general won't think of it that way and that could very well lead to even more loss of sales and permanent closure 
03-08-2009, 04:19 PM
#6
how do you know people wont buy cars from a bankrupt company? the company is bankrupt right now and people are still buying cars. The company is going to need huge bailouts every few months to stay alive it seems like. I really dont see another other option but ch. 11. They can regain trust with the american people but it will take time and a lot of changes.
Trending Topics
03-08-2009, 04:39 PM
#10
TECH Regular
iTrader: (1)
Join Date: Jan 2007
Location: Levittown PA
Posts: 498
Likes: 0
Received 0 Likes
on
0 Posts
Would it help GM to go bankrupt and shred its debts, yes, plain and simple.
But considering GM's biggest debt is the 500-600,000 retirees pensions and medical benefits. Who would absorb them?
GM's future healthcare obligations is projected to be $47,000,000,000. $47 Billion
http://healthcare-economist.com/2009...lthcare-costs/
GM's annual pension costs $7 Billion
http://www.nytimes.com/2008/07/10/op...owenstein.html
Who will absorb that??
I guess the few of you who favor Bankruptcy, also favor the Goverment (Taxpayers) picking up that tab?
Or is the real shortsighted reason you favor bankruptcy a anti-union bias?
Or a anti-American auto industry bias?
So I'll say it again idealistically restructuring would be good for GM.
But at what cost?
But considering GM's biggest debt is the 500-600,000 retirees pensions and medical benefits. Who would absorb them?
GM's future healthcare obligations is projected to be $47,000,000,000. $47 Billion
http://healthcare-economist.com/2009...lthcare-costs/
GM's annual pension costs $7 Billion
http://www.nytimes.com/2008/07/10/op...owenstein.html
Who will absorb that??
I guess the few of you who favor Bankruptcy, also favor the Goverment (Taxpayers) picking up that tab?
Or is the real shortsighted reason you favor bankruptcy a anti-union bias?
Or a anti-American auto industry bias?
So I'll say it again idealistically restructuring would be good for GM.
But at what cost?
03-08-2009, 05:14 PM
#11
TECH Apprentice
iTrader: (2)
Join Date: Jun 2004
Location: Euless, TX
Posts: 375
Likes: 0
Received 0 Likes
on
0 Posts
Would it help GM to go bankrupt and shred its debts, yes, plain and simple.
But considering GM's biggest debt is the 500-600,000 retirees pensions and medical benefits. Who would absorb them?
GM's future healthcare obligations is projected to be $47,000,000,000. $47 Billion
http://healthcare-economist.com/2009...lthcare-costs/
GM's annual pension costs $7 Billion
http://www.nytimes.com/2008/07/10/op...owenstein.html
Who will absorb that??
I guess the few of you who favor Bankruptcy, also favor the Goverment (Taxpayers) picking up that tab?
Or is the real shortsighted reason you favor bankruptcy a anti-union bias?
Or a anti-American auto industry bias?
So I'll say it again idealistically restructuring would be good for GM.
But at what cost?
But considering GM's biggest debt is the 500-600,000 retirees pensions and medical benefits. Who would absorb them?
GM's future healthcare obligations is projected to be $47,000,000,000. $47 Billion
http://healthcare-economist.com/2009...lthcare-costs/
GM's annual pension costs $7 Billion
http://www.nytimes.com/2008/07/10/op...owenstein.html
Who will absorb that??
I guess the few of you who favor Bankruptcy, also favor the Goverment (Taxpayers) picking up that tab?
Or is the real shortsighted reason you favor bankruptcy a anti-union bias?
Or a anti-American auto industry bias?
So I'll say it again idealistically restructuring would be good for GM.
But at what cost?
03-08-2009, 05:17 PM
#12
TECH Enthusiast
iTrader: (9)
Join Date: Jun 2006
Location: Indiana
Posts: 667
Likes: 0
Received 0 Likes
on
0 Posts
Would it help GM to go bankrupt and shred its debts, yes, plain and simple.
But considering GM's biggest debt is the 500-600,000 retirees pensions and medical benefits. Who would absorb them?
GM's future healthcare obligations is projected to be $47,000,000,000. $47 Billion
http://healthcare-economist.com/2009...lthcare-costs/
GM's annual pension costs $7 Billion
http://www.nytimes.com/2008/07/10/op...owenstein.html
Who will absorb that??
I guess the few of you who favor Bankruptcy, also favor the Goverment (Taxpayers) picking up that tab?
Or is the real shortsighted reason you favor bankruptcy a anti-union bias?
Or a anti-American auto industry bias?
So I'll say it again idealistically restructuring would be good for GM.
But at what cost?
But considering GM's biggest debt is the 500-600,000 retirees pensions and medical benefits. Who would absorb them?
GM's future healthcare obligations is projected to be $47,000,000,000. $47 Billion
http://healthcare-economist.com/2009...lthcare-costs/
GM's annual pension costs $7 Billion
http://www.nytimes.com/2008/07/10/op...owenstein.html
Who will absorb that??
I guess the few of you who favor Bankruptcy, also favor the Goverment (Taxpayers) picking up that tab?
Or is the real shortsighted reason you favor bankruptcy a anti-union bias?
Or a anti-American auto industry bias?
So I'll say it again idealistically restructuring would be good for GM.
But at what cost?
03-08-2009, 05:43 PM
#13
TECH Fanatic
iTrader: (8)
Join Date: Jan 2004
Location: B-town
Posts: 1,797
Likes: 0
Received 0 Likes
on
0 Posts
Obviously no one has the correct answer, that is why we are in the mess.
They go under we pay.
They stay we pay.
Either way, we pay.
I would atleast like to give them to opportunity to pay the money back and sell me a car.
They go under we pay.
They stay we pay.
Either way, we pay.
I would atleast like to give them to opportunity to pay the money back and sell me a car.
03-08-2009, 05:45 PM
#14
TECH Fanatic
iTrader: (2)
Join Date: Feb 2004
Location: detroit rock city
Posts: 1,162
Likes: 0
Received 0 Likes
on
0 Posts
how do you know people wont buy cars from a bankrupt company? the company is bankrupt right now and people are still buying cars. The company is going to need huge bailouts every few months to stay alive it seems like. I really dont see another other option but ch. 11. They can regain trust with the american people but it will take time and a lot of changes.
"The more important consideration is revenue loss. All research indicates bankruptcy would have a dramatic impact on GM sales and revenue. According to CNW Market Research, more than 80% of consumers intending to purchase a new vehicle (during the following 6 months) would not do so from a company that filed for bankruptcy. In the case of Daewoo Motor, this company experienced a permanent 40% reduction in business in South Korea following a two-year restructuring. If the South Korean market was as competitive as the U.S., Daewoo‘s revenue loss would likely have been far greater."
They got billions of dollars of our money and have nothing to show for it. If we use 1980's Chrysler as an example, I guess we could expect to have to bailout these automakers every 25 years. The bailout is not working. This is an irrefutable fact. There is not one shread of evidence that handing them even billions more will show any positive movement. That would be irresponsible and poor money management. Anti-union bias? When GM pays their uneducated employees on average, $22 more and hour than the competition and there is one worker paying out for every six retiree's for their ridiculous privatized retirement plans? You're goddamn right there's an anti-union bias. People aren't buying their cars today. So I really don't see how Chapter 11 will hurt them even more in that regard.
The cost gap between domestic and transplant workers is something that has been undergoing restructing before this mess(which has the sub prime mortgage mess as the number 1 factor) started. Toyota's execs were actually dumbfounded at the southern senator's assertions that the Detroit 3s workers made that much more than their employees. They backed the uaw president's claims that at some of their plants their workers actually made more than their union counterparts. That 70-some dollar per hour amount that gets thrown around includes all legacy costs, which the VEBA was going to go a long ways in changing.
All that, and labor costs are less than 10% of all costs in making a car. The emphasis placed on worker's compensation and it's effect on this downturn is disproportionate.
Forget all that. Say they go into bankruptcy. The government is still on the hook for billions directly, and even more indirectly. MORE than any amount it will take to pull them through this depression outside of court. If they do any type of bankruptcy, it will not look like any other in history. They'll be making it up as they go.
03-08-2009, 05:59 PM
#15
TECH Apprentice
iTrader: (2)
Join Date: Jun 2004
Location: Euless, TX
Posts: 375
Likes: 0
Received 0 Likes
on
0 Posts
So do you think that GM should not be asking for more, since apparently it's only been "over night"? Even GM knows the bailout they got isn't working, and it's been a little longer than over night. Handing them even more money is irresponsible. Unless you're a politician pandering for union votes.
Forget all that. Say the government gives them billions more, that they don't have, and they continue to fail like they are after the first bailout. What ever happened to all the rage over our national debt that we were seeing before last November? lol
03-08-2009, 06:18 PM
#16
TECH Fanatic
iTrader: (17)
Join Date: Jun 2004
Location: St. Louis
Posts: 1,373
Likes: 0
Received 0 Likes
on
0 Posts
Chrysler got a huge military contract and sold Chrysler Defense, and we didn't have the credit crunch that we have today. And here they are asking for another bailout that makes the first one look like chump change.
So do you think that GM should not be asking for more, since apparently it's only been "over night"? Even GM knows the bailout they got isn't working, and it's been a little longer than over night. Handing them even more money is irresponsible. Unless you're a politician pandering for union votes.
Forget all that. Say the government gives them billions more, that they don't have, and they continue to fail like they are after the first bailout. What ever happened to all the rage over our national debt that we were seeing before last November? lol
So do you think that GM should not be asking for more, since apparently it's only been "over night"? Even GM knows the bailout they got isn't working, and it's been a little longer than over night. Handing them even more money is irresponsible. Unless you're a politician pandering for union votes.
Forget all that. Say the government gives them billions more, that they don't have, and they continue to fail like they are after the first bailout. What ever happened to all the rage over our national debt that we were seeing before last November? lol
03-08-2009, 06:20 PM
#17
I believe that restructuring needs to be looked at heavily. Who wants to buy a vehicle that was assembled by a disgruntled employee. I also believe that since the taxpayers have a stake in these Corporations their operations and spending should be monitored under a microscope. If corruption can be eliminated from the process, I believe that these Corporations could be successful.
03-08-2009, 08:17 PM
#18
***Repost Police***
Join Date: Dec 2005
Location: DFW, TX
Posts: 2,480
Likes: 0
Received 0 Likes
on
0 Posts
No matter what I say, somebody will accuse me of being against the US automotive industry... but here goes; who ever thought it was a good idea for that many people to work for the same company? The thing I worry about the most is that a lot of these people that are making $30-$50/hr doing relatively-easy automotive assembly work aren't educated enough or prepared to do something else that would get them nearly as much money.
03-08-2009, 08:30 PM
#20
TECH Fanatic
iTrader: (8)
Join Date: Jan 2004
Location: B-town
Posts: 1,797
Likes: 0
Received 0 Likes
on
0 Posts
No matter what I say, somebody will accuse me of being against the US automotive industry... but here goes; who ever thought it was a good idea for that many people to work for the same company? The thing I worry about the most is that a lot of these people that are making $30-$50/hr doing relatively-easy automotive assembly work aren't educated enough or prepared to do something else that would get them nearly as much money.
I just want to remind everyone that is the folks who went to college that got us in this whole economic mess in the first place.
They are losing their asses too.