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US Lost Ten Billion Dollars on GM Bailout

Lord Tammerlain said:
Where was the money going to come from?

The banks which were getting money from the government in the first place? Use government bailout money from the banks to fund a private bailiout of GM?
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The price falls until a buyer comes forward -- no matter how low it goes.:peace
 
Jack Hays said:
That was a cruel question. I have already transitioned to the NBA. Which will you dislike more: a nonSEC national champion or Auburn?:peace
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I will always root for the conference no matter how wretched the stench might be in doing so...
 
Jack Hays said:
The price falls until a buyer comes forward -- no matter how low it goes.:peace
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The buyer does not always buy the bankrupt company to keep it in operation. But to shut it down and sell the land, and IP rights. With everything else being sold for scrap
 
AlabamaPaul said:
Oh, oh, can I answer? The same way Chrysler was bailed out previously, with loans guaranteed by the government, not by the government screwing over the bond holders to the benefit of the unions by taking over the company...
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So you would have like a different kind of government bailout,
 
Lord Tammerlain said:
The buyer does not always buy the bankrupt company to keep it in operation. But to shut it down and sell the land, and IP rights. With everything else being sold for scrap
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Relieved of its debt, GM was a fine bargain that would have attracted buyers.
 
Lord Tammerlain said:
So you would have like a different kind of government bailout,
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There's a HUGE difference between a government secured loan and direct lending by the government. It's kind of like the difference between getting an FHA mortgage and getting a student loan.
 
Jack Hays said:
Relieved of its debt, GM was a fine bargain that would have attracted buyers.
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That is if GM could have survived that long. Suppliers would not provide GM with parts, workers would not work, contractors would not do any work if they were not getting paid. The bankruptcy would have lasted under normal bankruptcy conditions for years, and suppliers and workers (salary and factory) would want to get paid. Where was that money going to come from in 2008
 
AlabamaPaul said:
There is a huge difference between loan guarantees and a direct takeover...
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BTW, I would have supported a government dismantling of the TBTF financial institutions before I would have agreed with TARP...
 
Born Free said:
Sense when does big daddy government go around and buy stock in a bankrupt company?
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"Since"

And yes, that is actually a role for government on occasion -- especially when "doing nothing" would plunge the nation into a depression. In particular, many Asian governments provide extensive financial support to local companies; it's one reason why they often out-compete US companies.


In fact big daddy did not want GM to file bankruptcy....
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A normal bankruptcy was not an option, period. No one in the private sector was willing to bail out the auto companies. If GM alone had gone under, it would have decimated one of the largest manufacturing industries in the US.

Creditors would still have gotten screwed in a normal bankruptcy. And the unions made concessions for years before the bankruptcy, and made some additional ones during the bailout.

GM has also posted profits for the last 15 quarters; it's a more nimble company; it shed a bunch of dead-weight brands. Like it or not, the bailout has succeeded.
 
Lord Tammerlain said:
That is if GM could have survived that long. Suppliers would not provide GM with parts, workers would not work, contractors would not do any work if they were not getting paid. The bankruptcy would have lasted under normal bankruptcy conditions for years, and suppliers and workers (salary and factory) would want to get paid. Where was that money going to come from in 2008
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Just like American Airlines. GM could have kept functioning in bankruptcy.:peace
 
Lutherf said:
There's a HUGE difference between a government secured loan and direct lending by the government. It's kind of like the difference between getting an FHA mortgage and getting a student loan.
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Again, it would still have been a bailout

Taxpayer dollars being used to prop up a failed company with no guarantee of being paid back. It could have cost the government (ie taxpayer) $11 billion dollars or more, or less depending on the size of the loan
 
Lord Tammerlain said:
Again, it would still have been a bailout

Taxpayer dollars being used to prop up a failed company with no guarantee of being paid back. It could have cost the government (ie taxpayer) $11 billion dollars or more, or less depending on the size of the loan
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We have now lost $25B. I'd take the $11B over that...
 
Jack Hays said:
Just like American Airlines. GM could have kept functioning in bankruptcy.:peace
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Sure it could have, but you have not listed any potential companies that would have taken the risk or would have had access to the money to do so
 
AlabamaPaul said:
One solution would have followed bankruptcy; the other did not...
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I'm curious about how they are going to manage the pension payouts, which are much higher now than they were at the time of the bailout! :shock:

Good evening, AP. :2wave: Keeping warm?
 
Lord Tammerlain said:
Again, it would still have been a bailout

Taxpayer dollars being used to prop up a failed company with no guarantee of being paid back. It could have cost the government (ie taxpayer) $11 billion dollars or more, or less depending on the size of the loan
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It's not the same.

In the case of a guarantee someone else comes up with the money and the government is only on the hook for a percentage of the total if things go belly up. With a direct loan the money comes out of the tax coffers and we're on the hook for the whole thing if it goes belly up.
 
Lord Tammerlain said:
$25 billion?

The government lost $10 billion according to the OP
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There was another $15B of tax loss carryover benefits that would normally have been lost through a normal bankruptcy proceeding...
 
Lord Tammerlain said:
Considering the probably costs of letting GM close, 11 billion is not bad

The cost would be, increased medicare and Medicaid bills, welfare and UI payments not just to GM workers and retirees, but to dealership and suppliers as well
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Except would GM have actually dissolved? I highly doubt that, what is more likely is those sweetheart labor deals wouldn't have been so sweetly protected.
 
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