Congress under pressure as GM bankruptcy possible

Hopefully Obama will give the politicians the same treatment and speach the holdout bond holders got.

"WASHINGTON (Reuters) - With General Motors Corp planning to end production of Saturns and Pontiacs at its Delaware plant which employs more than 1,000 people, state leaders are scrambling to win new work at the facility or persuade the company to move other operations to the region.

"This would appear on the surface to leave us in bleak circumstances," said U.S. Sen. Thomas Carper, a Democrat and former governor who helped save the 62-year-old Wilmington plant from closure in the early 1990s.

"We're encouraging them not to close the plant. At some point, GM will need more capacity," Carper said in an interview with Reuters just weeks ahead of a June 1 deadline for GM to show a White House/Treasury task force overseeing industry restructuring that it can be viable without government aid.

Failure to satisfy the task force would trigger bankruptcy where GM could try to finalize concessions. It is seeking givebacks from debtholders and the United Auto Workers and wants to more than halve its network of 6,000 dealers. GM plans to cut 21,000 factory jobs.

Lawmakers deferred to the task force as smaller Chrysler spiraled into a bankruptcy court. But there has been a broader political response to GM over the past week since a second carmaker bankruptcy would compound Detroit's uncertainty and likely radiate economic anxiety beyond the industry's Midwest core.

GM A BELLWETHER

Autos has one of the heaviest economic multipliers of any U.S. industry. For every job loss in auto assembly, another nine disappear elsewhere, Mark Zandi, chief economist and co-founder of Moody's Economy.com, has told Congress.

GM employs 88,000 factory and salaried workers in the United States. It has also been a bellwether for industries like steel, plastics, warehousing, software, healthcare, trucking and makers of glossy paper for car catalogs.

Michigan State University economist Charles Ballard believes GM's reach is vast enough to affect U.S. GDP "if the whole thing were to implode," which he believes is remote.

Still, the possibility of bankruptcy is rattling Washington, which has extended GM $15.4 billion since January. The Treasury likely will be on the hook for more GM financing before month's end as well as in any court restructuring.

GM's restructuring would wipe out half the current debt to taxpayers.

Lawmakers are under pressure from constituents and interest groups like labor, car dealers, and suppliers to intervene as the Obama administration reviews the GM business plan and prepares the company for a possible bankruptcy filing.

In meetings last week on Capitol Hill, GM Chief Executive Fritz Henderson fielded concerns of lawmakers from the primary auto states of Michigan, Ohio and Indiana. He also met with officials from Missouri, California, New York, Minnesota, Texas, Georgia, Illinois and Colorado.

OPTIONS DISCUSSED

Carper said he suggested to GM North American operations chief Troy Clarke that the company locate research work on batteries and other technologies to the mid-Atlantic.

Creating a business center close to Washington where key funding and other decisions on advanced technology programs will be made in coming years would make sense for Detroit, Carper said, noting that GM, Chrysler and Ford Motor Co have lost political clout as they have contracted.

Ford is restructuring but has not sought government aid.

Sen. Robert Corker, a Tennessee Republican, discussed with Henderson the fate of the Spring Hill assembly, storage and powertrain operation that employs 3,200 people in his state.

"We want those plants to stay open," Corker said in an interview. "We realize the company has got to be restructured and tough decisions have to be made."

Related businesses are also feeling pressure and gaining attention from Congress.

Last week, Democratic Sen. Charles Schumer pressed GM and bankrupt Delphi Corp to reach a deal for GM to buy back four of the supplier's production plants. Two of the plants are located in Schumer's home state of New York.

"I will continue to do whatever is necessary to see this purchase through," Schumer said.

On Wednesday, the House of Representatives small business committee heard from suppliers, which employ 685,000. Suppliers want Congress to authorize new assistance programs and encourage banks to resume lending to the sector once restructuring is completed at GM and Chrysler.

Congress is also considering legislation that would accelerate federal aid to communities facing sharp job losses. Michigan tops the nation in unemployment, with joblessness above 12 percent."

Hopefully Obama will give the politicians the same treatment and speach the holdout bond holders got.

I'm sorry, but are you saying that verbal lashing he gave the "holdouts" was the right thing to do? :confused:

I'm sorry, but are you saying that verbal lashing he gave the "holdouts" was the right thing to do? :confused:

Tread carefully on this, guys....

I'm sorry, but are you saying that verbal lashing he gave the "holdouts" was the right thing to do? :confused:

Nope. Sarcasm.

I feel for anyone losing their job, and I could end up being one of them.

I say if you are going to fix GM then fix it without scared cows, class warfare, and political favors.

Everyone wants to go to heaven, but no one wants to die. I think the old saying applies on this one...

Willmington plant made the Saturn L100. Retooled the whole plant. I woorked on body shop robotice tools. No one purchased the car. A big looser for GM. Then, Lutz came with the Pontiac/ Saturn - Soltice/ Sky. A big winner. But, they had destroyed all the automation which did not support the small car frame/ body. Mostly a manual production plant, and, could not make enough units and a real money looser for GM due to high labor content. GM had to install some MIG welding robots due to poor quality manual welding on the Soltice/ Sky. Sad all around ain't it. I know, I worked gm as a salary ccrw Engineer. Now unemployed, but, still true to the American brand and a maximum gear-head. I'm still on H of an Engineer. (I eat porche's with my 97ss). B.

Willmington plant made the Saturn L100. Retooled the whole plant. I woorked on body shop robotice tools. No one purchased the car. A big looser for GM. Then, Lutz came with the Pontiac/ Saturn - Soltice/ Sky. A big winner. But, they had destroyed all the automation which did not support the small car frame/ body. Mostly a manual production plant, and, could not make enough units and a real money looser for GM due to high labor content. GM had to install some MIG welding robots due to poor quality manual welding on the Soltice/ Sky. Sad all around ain't it. I know, I worked gm as a salary ccrw Engineer. Now unemployed, but, still true to the American brand and a maximum gear-head. I'm still on H of an Engineer. (I eat porche's with my 97ss). B.

Hang in there. I'm hoping things work out well for you.

Yes, sad all the way around.

I think it's funny to watch these politicians squirm...

This is what they wanted, right? They wanted a bankrupt and badly damaged GM, right?

After all, GM is the biggest manufacturer of "horrible SUVs that they are forcing down the throat of consumers"


*They cut their OWN throats... GM needs to do whatever is best for GM And if that means moving production overseas, contracting overseas, closing half of their plants or WHATEVER, then so be it!*

These politicians didn't give a rat's a** about the company until it started affecting their own pockets and comfort zones.

As for the workers... I'm so very sorry. It's just a bad situation for you guys regardless. (GM can either cut plants or move production. Thank Uncles Sam's regulators for that)

I think it's funny to watch these politicians squirm...

This is what they wanted, right? They wanted a bankrupt and badly damaged GM, right?


It's just a bad situation for you guys regardless. (GM can either cut plants or move production. Thank Uncles Sam's regulators for that)
No offense intended but I'd say that blaming "Uncles Sam's regulators" for GM's problems is as misdirected and saying it's entirely the union's fault.

I don't know what the politicians wanted...they claimed all the money they were throwing at Detroit was to prevent bankruptcy but I find it impossible to believe that any of them truly felt bankruptcy could be avoided.

On the other hand, if they knew bankruptcy was unavoidable or if that's what they wanted all along as you say above, why didn't they just let in happen in the first place? Who really benefited by letting it drag out this long?

On the other hand, if they knew bankruptcy was unavoidable or if that's what they wanted all along as you say above, why didn't they just let in happen in the first place? Who really benefited by letting it drag out this long?

Did GM's CEO claim that bankruptcy was unavoidable? No, he portrayed it as a temporary problem that would be sorted out when the market rebounded.

I don't believe that most politicians understand what a financial basketcase they were inheriting. (With a few notable exceptions.) IMO, GM deliberately misrepresented their financial position in order to get approval from a lame-duck administration that was already halfway out the door.

Anyway, I certainly didn't hear any congressional testimony about Opel and Daewoo going bankrupt last December.

Did GM's CEO claim that bankruptcy was unavoidable? No, he portrayed it as a temporary problem that would be sorted out when the market rebounded.

I don't believe that most politicians understand what a financial basketcase they were inheriting. (With a few notable exceptions.) IMO, GM deliberately misrepresented their financial position in order to get approval from a lame-duck administration that was already halfway out the door.

Anyway, I certainly didn't hear any congressional testimony about Opel and Daewoo going bankrupt last December.

If GM deliberately misrepresented anything, the Board and top officers would be in jail right now. Ever heard of Sarbanes-Oxley? Moreover, independent auditors would have to be party to any such misrepresentation.

If GM deliberately misrepresented anything, the Board and top officers would be in jail right now. Ever heard of Sarbanes-Oxley? Moreover, independent auditors would have to be party to any such misrepresentation.
Accounting rules, SEC regulations and even Sarbanes Oxley is about audited financial reporting; giving opinions in testimony before congress isn't covered.

Now if only we could hold politicians to something like Sarbanes Oxley; then we would have something!

Accounting rules, SEC regulations and even Sarbanes Oxley is about audited financial reporting; giving opinions in testimony before congress isn't covered.

Now if only we could hold politicians to something like Sarbanes Oxley; then we would have something!


Sorry, you are 100% incorrect. Publicly reveaking information that can be viewed as misleading is a criminal offense. It is covered by the Securities and Exchange Act of 1934 as well as Sarbanes/Oxley and other legislartion that seeks to define "safe-harbor" statements.

Sorry, you are 100% incorrect. Publicly reveaking information that can be viewed as misleading is a criminal offense. It is covered by the Securities and Exchange Act of 1934 as well as Sarbanes/Oxley and other legislartion that seeks to define "safe-harbor" statements.
If GM purposely provided false or misleading financial information in published reports, filings or testimony that could be a criminal matter (Sarbanes Oxley not required). However, neither the SEC nor Sarbanes Oxley make it criminal for a CEO to give his "opinion".

So long as the numbers provided were accurate and no matter how much the numbers may have or should have led most people to believe GM was un-salvageable; it does not mean Wagner can be charged with a crime for saying Gm could be saved.

Most people knew the picture GM's management was a pipe dream; they just didn't want to believe it.

Most still don't although the truth is getting more and more difficult to ignore.

GM has revised several past year financial reports, and also settled a number of shareholder lawsuits over misleading statements. But the legal issues are aside from I don't believe that Wagoner's statements before Congress fully detailed GM's financial issues.

The point being, I don't see why "politicians" are being blamed for "dragging this out". Rather, they are the ones taking heat for GM's lousy business decisions. What did GM do in 2008 to prepare themselves for bankruptcy, save Opel, properly capitalize Daewoo, etc etc etc?

GM has revised several past year financial reports, and also settled a number of shareholder lawsuits over misleading statements. But the legal issues are aside from I don't believe that Wagoner's statements before Congress fully detailed GM's financial issues.

The point being, I don't see why "politicians" are being blamed for "dragging this out". Rather, they are the ones taking heat for GM's lousy business decisions. What did GM do in 2008 to prepare themselves for bankruptcy, save Opel, properly capitalize Daewoo, etc etc etc?
Corporations revise financial statements all the time; there isn't anything improper about that unless the items they are correcting were not errors at all but were statements made with the intent to be misleading.

They aren't alone in this but Congress deserves a lot of the bad feelings.

Most of the population of the country was against all the government bailouts including the money given to Chrysler and GM. With Chrysler in bankruptcy and GM two weeks from filing it's pretty clear that the public was right and the politicians were wrong all along. All those billions spent so far could have been saved had Chrysler and GM gone into bankruptcy in the first place. They could have entered a prearranged, structured bankruptcy in December or January and might even be getting close to being out of bankruptcy by now.

Most of the population of the country was against all the government bailouts including the money given to Chrysler and GM. With Chrysler in bankruptcy and GM two weeks from filing it's pretty clear that the public was right and the politicians were wrong all along. All those billions spent so far could have been saved had Chrysler and GM gone into bankruptcy in the first place. They could have entered a prearranged, structured bankruptcy in December or January and might even be getting close to being out of bankruptcy by now.

Given that they had to dismiss Wagoner and extend the deadline by 2 months so that GM could prepare for bankruptcy, I just don't see it. GM hasn't filed yet because of GM, not the politicians.

I think the main issue is everything happened so fast. If we go back to a year ago today, amd I told you that within 3 months, GM's sales would be down 50% and stay there for several months, I would be laughed out the room. The last 6-9 months have been nothing but an absolute doomesday come true for automakers. I remember last September GM wanted to merge with Chrysler because they supposedly had $10 Billion in cash. In the two months it took to 86 the idea, Chrysler burned through that cash.

With GM I really believe they are in the mess they are now because of two issues. First off, when GMAC could not finance loans for anyone under 700 for 1-2 months, that was absolutly crippling. Cerebeus was using GMAC as a tool to push GM to buy Chrysler, but in reality it just crippled everything. No one wants to attempt to buy a car and then get turned down for a loan, so this kept a lot of buyers out the showroom. The other thing is the media circus that was created and has continued since Wagoner left. I mean honestly..if you were a consumer, would you feel better spending your $30K on a Toyota or GM vehicle after all the bad press GM has been getting?

I think the main issue is everything happened so fast. If we go back to a year ago today, amd I told you that within 3 months, GM's sales would be down 50% and stay there for several months, I would be laughed out the room. The last 6-9 months have been nothing but an absolute doomesday come true for automakers.

You're right that it happened very fast. On the other hand, there had been speculation about a GM bankruptcy going on throughout 2008, but apparently GM had been operating under optimistic projections and hadn't done any of the legal groundwork.

And, a member here did predict a 11-12M/year market, and unfortunately he supposedly really was laughed out of the room.

The other thing is the media circus that was created and has continued since Wagoner left. I mean honestly..if you were a consumer, would you feel better spending your $30K on a Toyota or GM vehicle after all the bad press GM has been getting?
The media circus started when Wagoner showed up on Capital Hill. I agree that what's been going on since is just as bad as bankruptcy in the public's mind. It's unfortunate that GM didn't have a Plan B to ask for DIP financing so they could file back in December.

"Even bankruptcy can't save this bunch" according to Buickman.

Henderson will not lead GM for much longer
Automotive News
The trouble with GM is its management

May 11, 2009 - 12:01 am ET

To the Editor:

After years of watching General Motors decline, I am convinced that the troubles at GM lie squarely at the feet of management.

It is customary to hear every excuse under the sun; i.e., wages, health care, pensions, exchange rates, material costs, government regulations, the weather, fuel prices, the economy, credit crisis and on and on.

Never is the blame pointed out as failed leadership.

GM has cut thousands of employees, closed plants across America, taken away benefits from retirees, sold assets with reckless abandon and borrowed to the hilt.

Now the solution of the day is eliminating dealers. How tragically wrong is that?

The people running GM have no clue what to do and take ill-advised actions in the name of "reorganizing" and "turning around." Their strategies don't work, and yet they are still in charge. Nonsense.

Where would GM be today had the company heeded the advice of John DeLorean, Ross Perot, and Jerry York?

Even bankruptcy can't save this bunch.

All that will happen is a lessened liability structure, then back to business as usual with Mark LaNeve and company continuing the most methodically mundane marketing. Wait, make that asinine merchandising.

It's time for people to wake up and realize that what needs to happen is a complete restructuring of GM management. By that I mean a housecleaning in the executive suites.

That's where the trouble lies, not with tens of thousands of loyal employees, retirees, suppliers, dealers and salespeople.

That is the bottom line and our only hope.


JAMES M. DOLLINGER

Chairman

Dollinger Motors

Flint, Mich.

The writer, a retail automotive marketing consultant, also is a salesman at a Buick dealership and a GM shareholder.

http://www.gminsidenews.com/forums/1738912-post5.html


The more I read of Buickman's rants, the more I start believing in his rhetoric. There must be a layer of bureaucracy that impedes progress at GM. Wagoner and the board cannot be solely responsible for the mess of the past 30 years. There has to be something more endemic. There's been more than a passing hint that GM's management structure is to blame... it might be a good time for a wholesale cleanout, methinks.

If GM purposely provided false or misleading financial information in published reports, filings or testimony that could be a criminal matter (Sarbanes Oxley not required). However, neither the SEC nor Sarbanes Oxley make it criminal for a CEO to give his "opinion".

So long as the numbers provided were accurate and no matter how much the numbers may have or should have led most people to believe GM was un-salvageable; it does not mean Wagner can be charged with a crime for saying Gm could be saved.

Most people knew the picture GM's management was a pipe dream; they just didn't want to believe it.

Most still don't although the truth is getting more and more difficult to ignore.

Normally, on this board I try my best to avoid being antoagonistic, but you are dead wrong. See the SEC rules regarding appropriate statements and the applicability of safe harbor.

Normally, on this board I try my best to avoid being antoagonistic, but you are dead wrong. See the SEC rules regarding appropriate statements and the applicability of safe harbor.
I doubt if anyone here wants to see an argument citing statutory law...I say you are wrong; you say I am. I doubt very many people here care either way.

If you really want to prove your point to me then feel free to send me the specific citation that you believe proves your point and I'll be happy to read it. Otherwise, I don't believe it's worth arguing about in an open thread.

Meanwhile, if I see Wagoner on the news being perp-walked into a jail cell and charged with a crime then I'll come back to this thread a apoligize to you.