The GM and Chrysler Plans
February 17th, 2009Today GM and Chrysler provided interim plans to the US Government in hopes of receiving additional aid (see GM and Chrysler Seek More Aid or GM and Chrysler Release Plans). According to reports, Chrysler is seeking an additional $5B in aid, while GM is currently asking for $16.6B.
You can read a copy of their respective plans here:
I was impressed with GM’s offering. Truthfully, I expected far less. GM’s plan reads as if management believes it has something left to fight for: The plan is detailed, carefully constructed, and thoughtful. Certainly, GM faces significant hurdles in the form of the UAW, and its bondholders. In addition, the jury is out on whether current management deserves to remain in place. But that said, based on this proposal, I would be inclined to support some additional aid package for GM, …but with more strict provisions (see my previous posts Pre-Packaged Bankruptcy and Preventing Moral Hazard for details).
As for Chrysler, I am inclined to agree with Calculated Risk on this one. Chrysler’s plan is a sham. Chrysler is toast, and Cerberus knows it. Based on this plan, I see the likelihood of the US Government providing additional aid for Chrysler as remote. I would be shocked if the US Government were to continue to put taxpayer money at risk to prop up Cerberus, and its failed enterprise (see Aid for Chrysler? Just say No! and Is the End Nigh for Chrysler? for details).
But now that Chrysler and GM have submitted their plans, the real work for Team Obama begins here…
