Breaking: WH: TOTUS will Announce Auto Plan Monday…
CNBC Chyron; WH announcement: Auto Task Force winding down decisions to be made on aid, announcement to be made by TOTUS Monday
This is fascinating because the debt holders have been LOUDLY complaining they don’t want a cramdown when the union isn’t cramming down to the level Steve Rattner (head of TOTUS’ Auto Task Force) is announcing as a done deal left and right for two weeks..
Also GM has been publicly stating they do not need or want anymore government money, but Rattner has been floating the idea that GM needs billions, more than tens of billions more..
Mr. Rattner dismisses the idea that his team may not have enough auto expertise to tackle the job. “We are not trying to run car companies,” he says. He compares the work to what he and others have done in the private sector. “This is the type of investment decision that many of us on this team are used to making.”
…Mr. Bloom focused on minute aspects of the business strategy, and Mr. Rattner, on how the deal would be structured. People on the Fiat team came away thinking that the task force’s questions betrayed a limited understanding of the industry. “It’s fair to say we walked out of the meeting and were a little unsettled,” says one member of the Fiat team….
…The bondholders’ attorneys laid out the details of a plan to exchange debt for equity, which would reduce pressure on GM to repay the bondholders. As the lawyers walked through a litany of potential challenges, Messrs. Rattner and Bloom took notes, offering minimal commentary, according to people who attended the meeting. Since then, the bondholders committee has had little contact with the task force. Its lawyers say they were surprised two weeks later when Mr. Rattner publicly criticized them for not being flexible enough….
Obama said in his townhall yesterday Auto Makers will have to shape up and make many changes..
I think they are taking over whether GM agrees or not
Here is how the car dealer association reacted to the news that the new standard is actually HIGHER than that of even CA:
The following is a statement by John McEleney, chairman of the National Automobile Dealers Association, regarding the Model Year 2011 fuel economy standard:
“By setting a fuel economy standard higher than what California regulators have proposed, the Obama administration today removed the last argument for state-by-state regulation of fuel economy. The structure of California’s program — with its exemptions for major automakers, its ‘patchwork’ design and its loopholes — is unworkable as a national policy.
“Only a single, national fuel economy standard gives the auto industry the regulatory certainty necessary to produce and market the fuel efficient cars of tomorrow. In contrast, California’s patchwork fuel economy program would exacerbate the auto sector’s severe economic turmoil.
“Now that the new Corporate Average Fuel Economy (CAFE) law, passed by Congress in Dec. 2007, is at last being implemented, America’s auto dealers call on all stakeholders, including the Obama administration and California regulators, to embrace a single, national fuel economy standard.”
Poor self deluding bastxrds. Detroit Free Press says this move means no such thing, and that EPA is going to rule any minute that states CAN set their own standards..good luck with economies of scale improvements in our new government owned auto plants…
In addition, the U.S. Environmental Protection Agency is expected to allow California and other states to set their own standards within months…
…In the rule published today, the National Highway Traffic Safety Administration said it would press for “creating the maximum incentives for innovation” in its new standards, and would consider tougher fines for falling short of fuel economy standards, as many exotic brands do.
The rule sets 2011 model year fuel economy for passenger cars at 30.2 m.p.g., and 24.1 m.p.g. for trucks. NHTSA estimated the rules could cost the industry $1.4 billion, but the cost would be less if automakers use credits to meet the standard.
CNBC has learned the details of the revised terms being offered to the GM debt holders and the UAW. The negotiations remain fluid and details could change as offers and counter-offers are made, said sources familiar with the situation.
(on VEBA) GM is offering them (the Union) $10 billion in cash, amortized over 20 years, and $10 billion preferred stock with a 9% coupon.
GM has offered bondholders two choices. Choice 1: 8 cents in cash, 16 cents in new unsecured debt, and 90% of the equity in GM. Choice 2: Still unclear, but it is believed to include 90% of equity in the new company.
Last weekend, G M bondholders sent a letter to Treasury Secretary Timothy Geithner and the leaders of the auto task force expressing frustration that they have received no response from either GM or the auto task force regarding their suggestions for a near $28 billion debt exchange.
IMO, if the government screw the bondholders we can just proceed knowing the rule of law is gone in business and divest accordingly.