So it’s pretty apparent people are upset that there are different rules for the automakers and banks. Well, I’m not sure what to tell you except the entire economy isn’t leveraged against the health of the Big 3. Yes, they’re vitally important and I think we should continue to help them out, but they don’t come anywhere close to the problems we face in the financial markets. Not by a long shot.
And so GM was offered some additional short term help with strings attached. And they took it. You can argue that Wagoner was forced out, but he had a choice. Just like the banks have to submit themselves to stress tests. And all of these CEOs know what the right thing to do is given that they’ve screwed up big time.
But it’s not just the businesses being asked to change. Big Labor is being put through the wringer too:
A key ingredient is getting the UAW to agree to an entirely new labor contract, including major reductions in health-care benefits, according to several people involved in the matter. “That’s the No.1 wildcard here,” one of these people said Monday.
Under this plan, the “good” GM would not be expected to hold the tens of billions of dollars in retiree and health care obligations that hurt the auto maker in recent decades. Instead, those obligations would be transferred to an “old GM,” made up of less-desirable brands like Hummer and Saturn, and underperforming plants and other assets. This part of GM would likely sit in bankruptcy much longer while a buyer is sought for the parts or it is wound down. Proceeds from the sale of old GM would go to pay claims to various creditors, including GM retirees.
“That is the plan, to the extent it comports with the bankruptcy laws,” said one person familiar with the matter.
What I don’t understand about all of the chatter today is I thought this is exactly what critics wanted last year. And yet all I’m reading today is how “socialist” this is. So yeah, color me puzzled.
By the way, that WSJ article is fantastic. Do try to read the whole thing.