GM should follow the Obama administration and blame it all on Bush.
DETROIT (AP) -- General Motors revealed in court filings late Tuesday that it will soon ask a federal bankruptcy judge to shield the company from legal claims for conduct that occurred before its 2009 bankruptcy.
The automaker's strategy is in a motion filed in a Corpus Christi, Texas, federal court case, and in other cases across the nation that involve the defective ignition switches that have led GM to recall 2.6 million small cars.
The motion asks U.S. District Judge Nelva Gonzales Ramos to delay action on the lawsuit until the bankruptcy court rules and other federal courts decide if the case should be combined with other lawsuits. But GM says it's not asking to halt action on a motion to force GM to tell customers not to drive their cars that are being recalled.
GM has said at least 13 deaths have been linked to the switch problem. The switch can unexpectedly slip out of the "run" position, shutting down the engine, knocking out power-assisted steering and power brakes, and disabling the air bags. GM admits knowing about the problem for at least a decade, but it didn't start recalling the cars, including Chevrolet Cobal.
A bankruptcy judge has overruled objections to
the city’s bankruptcy filing, freezing several lawsuits filed against
Detroit and will allow the bankruptcy case to proceed in federal court.
U.S. District Judge Steven Rhodes also decided
Wednesday that an automatic stay triggered by Detroit’s Chapter 9
filing extends to Emergency Manager Kevyn Orr, Gov. Rick Snyder and
members of the restructuring team.
The decision comes after city lawyers — during
a hearing that lasted almost two hours over the biggest municipal
bankruptcy case in U.S. history — argued Wednesday morning that Detroit
would be “irreparably harmed” if retirees were able to block its Chapter
9 filing.
A123 Systems has filed for bankruptcy protection in federal court in Wilmington, Delaware, Bloomberg reports. Late yesterday, the battery company had warned that
it was about to default on several loan issues, noting that a
bankruptcy filing was a possibility; but it still seems startling to see
them file just hours later.
A123 makes rechargeable lithium-ion batteries for electric cars. The
company has been hurt by the slow development of the electric car
market.
Don’t be surprised to see this turn into a Solyndra-style political
football; A123 had received $249 million in grants from the U.S.
Department of Energy.
A123 this morning is down 14 cents, or 57.9%, to 10 cents. Keep reading…
President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion. Read the whole article...
Voters are more open-minded if government employees might have their pensions reduced as part of the bankruptcy.
(Rasmussen)- A new Rasmussen Reports national telephone survey shows that just 17% of Likely U.S. Voters believe states should be allowed to file for bankruptcy if they are unable to pay their financial obligations. Fifty-four percent (54%) oppose bankruptcy for states, and another 29% are undecided. (To see survey question wording, click here.)
But voter support nearly doubles to 32% when the question is phrased to include the possibility that government employees might have their pensions reduced if their state filed for bankruptcy. Fifty-one percent (51%) are still opposed to allowing states to declare bankruptcy, but only 17% remain undecided.
Week-kneed state level politicians have pandered for public employees votes for years. The legacy of this pandering is crushing debt due partly to bloated pension obligations. The only way out may be bankruptcy. Illinois and California are the leading contenders.
(NYT)- Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.
But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.
The AP gathered data from the nation's 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.
“And folks look, AARP knows and the people working here today know, the president knows, and I know, that the status quo is simply not acceptable,” Biden said at the event on Thursday in Alexandria, Va. “It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it. It can’t do it financially.”
“We’re going to go bankrupt as a nation,” Biden said.
“Well, people that I say that to say, ‘What are you talking about, you’re telling me we have to go spend money to keep from going bankrupt?’” Biden said. “The answer is yes, I’m telling you.”
President Obama's flaunting of established bankruptcy law is a shameful. There will be long lasting repercussions for business financing. Who will loan a unionized company that doesn't have a stellar credit rating money now? No one will. Creditors will know they will have to go to the back of the line behind unions if the company is forced to file bankruptcy. This lack of financing will push more companies into bankruptcy or force the government to bail them out with our tax dollars. That may be Obama's ultimate goal. When companies are forced to look to the Obama administration for financing, they are effectively under Obama's control.
When we last left the negotiations between Chrysler’s senior bondholders and Barack Obama’s auto task force, Thomas Lauria and his clients alleged that the government used intimidation tactics and threatened to sic the White House press corps on individuals if they didn’t give up their rights to allow the unions to win in the bankruptcy. Congress took an interest in this”madman” theory of the Presidency and got access to some e-mails floating between the task force and an analyst. Rep, Steven LaTourette (R-OH) reads from the e-mails, in which the auto task force calls Lauria — their attorney — a “terrorist” and refuses to negotiate after a Chrylser expert consulted him:
Well, There Is One Terrorist Obama Won't Bend Over For (video)
President Obama announced today that Chrysler LLC would enter chapter 11 bankruptcy. After throwing billions of taxpayer dollars at Chrysler on the pretext that bankruptcy would be a horrible thing, Obama has now decided bankruptcy is a good thing. President Obama severely criticized the secured debt holders who would not agree to his terms. The four institutions that hold 70% of the secured debt were coerced into accepting a deal that is not in their best interest. They took TARP money and ,figuratively, "sold their soul to the devil." Now, they have to pay the price for that decision. If their sacrifice was for the taxpayers who bailed them out, this would be fair. Instead, the UAW is the recipient of their coerced largess. The other 30% of debt is held by small investors and hedge funds who received no government bailout. They balked at being asked to write off 70% of their money while the UAW is only taking a 50% "haircut." Under U.S. bankruptcy law, secured debtors should be in line in front of the UAW. These creditors rightly object to being asked to give away their money to the UAW. The hedge funds and pension funds involved have a fiduciary responsibility to get the best deal possible for their investors. Federal Judge Arthur J. Gonzalez has been assigned to the case. He was first appointed in 1995 and is up for reappointment later this year.
Here is the administration's just issued statement on Chrysler: Chrysler
