Now that GM is floating belly up (Page 2)

"The Treasury Department will provide $30.1 billion in financing to support GM in its transition, Administration officials said, noting that Treasury “does not anticipate providing any additional assistance to GM beyond this commitment.” The government said it will receive $8.8 billion in debt and 60% of equity in New GM, as well as the right to appoint all but two initial directors.

“We certainly intend to maximize taxpayer proceeds,” an Administration official said, but declined to project how much money taxpayers would get back -- or when.

The Administration took pains to say it was not planning to be involved with GM for long.

Not quite sure what to think of this

It outlined four principles related to GM: One, that it would “seek to dispose of its ownership interests as soon as practicable”; Two, that in “exceptional” cases the government “will reserve the right to set upfront conditions to protect taxpayers”; Three, that the government would manage “its ownership stake in a hands-off, commercial manner” and “will not interfere with or exert control over day-to-day company operations, adding that no government employees would be on the boards or employees of the company; Four, that the government would vote its shareholder stake only “on core governance issues.”

It outlined four principles related to GM: One, that it would “seek to dispose of its ownership interests as soon as practicable”; Two, that in “exceptional” cases the government “will reserve the right to set upfront conditions to protect taxpayers”; Three, that the government would manage “its ownership stake in a hands-off, commercial manner” and “will not interfere with or exert control over day-to-day company operations, adding that no government employees would be on the boards or employees of the company; Four, that the government would vote its shareholder stake only “on core governance issues.”

I'm not a financial wiz, and I'm just hanging by a thread trying to keep up with all of this, but what has not been mentioned in any of this post is the effect GMAC had on GM's woes. 

As I understand it, when GM decided to finance it's own vehicles everything was fine but then GMAC ventured into some of the same territory that other financial institutions did, such as housing loans.  As the house of cards fell and banks could no longer get credit to operate, GMAC got caught up just like the rest.

If my info is correct, and please correct me if I'm wrong, this is another example of a lender getting off into risky territory to turn a quick buck and got caught with its pants down...and of course helped take down a company in GM that was shakey to begin with.

From the NY Times:

In its bankruptcy petition, G.M. said it had $82.3 billion in assets and $172.8 billion in debts. Its largest creditors were the Wilmington Trust Company, representing a group of bondholders holding $22.8 billion in debts, and affiliates of the United Auto Workers union, representing nearly $20.6 billion in employee obligations.

So, if GM were able to walk away from UAW obligations they would still hold over $150 billion in debts.  Am I wrong?  If not, I'm not sure how this is all the UAW's fault. 

Also, where does that $80-250 per hour figure come from?  Fully loaded with health care, pensions, etc. the high number that I've seen reported is closer to $70 per hour.

That's the wonderful thing about stock, you don't have to sell it all in one big block.  It's not $50,000,000,000 or $0.  The government can dispose of it's stock holdings in the new company over time, which removes the government from owning a controlling interest in the company.