Tuesday, December 9, 2008
U.S. Rescue May Give Government Stakes in GM, Ford and Chrysler
Dec. 9 (Bloomberg) -- The U.S. government may end up holding stakes in General Motors Corp., Ford Motor Co. and Chrysler LLC if Congress and the White House reach agreement on a financial bailout for the automakers.
Under the proposed rescue, details of which are still being discussed, the Treasury would get warrants for stock equivalent to 20 percent of any government loans. With GM seeking as much as $10 billion and valued at $3 billion, the state may become the biggest shareholder. The legislation isn’t clear on what kind of holding the government would take, leaving it the option of preferred, common, voting or non-voting shares.
Democrats in Congress drafted the plan to aid automakers with $15 billion in loans. The legislation, which allows the president to appoint a so-called auto czar, needs 60 votes to overcome a Republican threat in the Senate to stall the measure in endless debate using a parliamentary maneuver called a filibuster. Some Senate Republicans yesterday expressed doubts about the plan, to be voted on in a special session this week.
“I remain concerned about committing federal dollars for the Big Three without any clear strategy that the money will be put to good use and repaid,” said Senator Judd Gregg of New Hampshire, the top Republican on the Budget Committee....More