GM Bankruptcy lawyer Harvey Miller confirms what Steve Rattner’s departure from the Presidential Task Force On Autos suggested, telling Bloomberg “I really believe that by the end of August, the task force will be gone.” Miller explains that “the winding down of Old GM and Old Chrysler will take a significant period of time, but it will not involve anything like the task force. It will be an ordinary liquidating bankruptcy.” Rather than the bankruptcy code-shredding process that recently wrapped up. The credit market is going to take it from here. “I’ve been around a long time in this business and I’ve heard financial institutions say, ‘We will never lend another penny to this industry’ on the basis of this decision in bankruptcy court or elsewhere,” says Miller. “Three or four months later, they’ve totally forgotten. There is no institutional memory in this world.” At least the last part of that is dead on. The rest? Perhaps a tad optimistic. Most likely, some form of government guarantees will be necessary to convince banks that GM is creditworthy. Otherwise, its $50b debt load to the taxpayers and internal turmoil make it a poor target for private investment. But, hey, why not give it a whirl?
It’s called keeping the ball moving.
Great. So how long ’til we get our money back? My bet is never. Ever. Who’s going to be riding herd over GM, instructing them on which cars shall be built? I thought the PTFOA was to be responsible for that.
I’ll believe it when I see it…
Is the forgetfulness of institutional lending supposed to make us feel better?
Is it even relevant if the U.S. Government will rescue those ‘too big to fail’?
Some individuals often pocket massive amounts of money when they complete large deals (the bankers and the M&A folks). I find it unlikely that memory of past deeds remains high in their conscious when they’re staring at the possibility of a massive bonus so they can buy that third summer cottage.
When they talk about ‘liquidating’ ‘old’ GM and ‘old’ Chrysler, did they ever break out what material assets (i.e. Manufacturing Locations) were part of the ‘old’ entities?
I’ve yet to see a list stating what actual Plants are scheduled for closure as a result of this so-called BK.
The question is not how will we get our money back, but how will our great-great-grand children get their money back?
“Three or four months later, they’ve totally forgotten. There is no institutional memory in this world.” At least the last part of that is dead on.
I don’t know about that. It’s not 2005 – the daze where anyone or firm with a toe-tag credit rating could get financing are gone. This recession’s memories and causes will linger.
Most likely, some form of government guarantees will be necessary to convince banks that GM is creditworthy.
Yup – which is why I’ll sooner gargle battery acid than buy a new GM product.
I feel for Ford. They took advantage of easy credit with great timing – but now have to compete with the taxpayer financed competition.
Lets hope they actually kill off this group when they say they will.
And I’m wondering when I’ll see the money spent on Iraq float back into my pockets at the same time the money spent on the domestic automakers will…of course Iraq cost significantly more but I digress.
I don’t believe it.
When have you EVER seen a government/governmental agency willingly disband?
I believe we’re still paying ‘temporary’ taxes that were supposed to support the war effort? WWI, that is.
Rather than the bankruptcy code-shredding process that recently wrapped up. …. ‘We will never lend another penny to this industry’ on the basis of this decision in bankruptcy court or elsewhere,” says Miller.
This is a very good example that repeating things enough will make it true in the minds of people. That these types of statement never ever get challenged (consider their source) is compelling evidence of effective media saturation.