GM Stock Tanks After Short-Term Bailout Announced

A stinging quick rinse

Susan Tompor of the Detroit Free Press writes in a recent editorial that GM will have 30 days to detangle. President Obama calls it a “quick-rinse” bankruptcy. GM stock has tumbled as a result. Investors don’t see more cash advance loans coming from the Obama administration.

Brad Coulter of O’Keefe & Associates said that “the quick rinse sounds good; I just don’t know if it would really work.” The fast-track, pre-packaged reorganization plan the Obama administration appears ready to lay on General Motors is intended to erase debt and contractual obligations, but it has also never been done in this way before.

What would happen?

We don’t know for certain yet. Not until President Obama explains his intentions more fully. Some speculate that the federal government will specify exactly how much money will be made available for what creditors. Take it or leave it.

“We’re in new territory,” Coulter said. “Unless a lot of government funding were involved, I’m not sure how the quick rinse would work.”

No more bailouts?

President Obama has made it clear that the GM and Chrysler will have a limited amount of time to work with creditors, unions, and other stakeholders. They must fix the mess they’ve made by completely restructuring their business, which is no small task to complete in 30 days. ... click here to read the rest of the article titled "GM Stock Tanks After Short-Term Bailout Announced"