The U.S. is set to steer General Motors toward bankruptcy, just as it did with Chrysler, the Washington Postreports this morning. GM has a June 1 deadline to restructure itself, and the Post says it's unlikely that the company will be able to satisfy all of its creditors out of court. (Reuters reports, meanwhile, that bankruptcy isn't a sure thing and the situation could change before the deadline.)
If GM does restructure through bankruptcy, the U.S. government will be there to prop it up. GM's draft plan calls for $30 billion more, the Post reports -- presumably loans to both support the company through bankruptcy and help it emerge afterwards. In the case of Chrysler, much of the U.S.'s loans were forgiven in exchange for a government stake in the company. In this case, the U.S. could get as much as a 50 percent stake.
So the government's incredible investment in the auto industry seems likely to grow. Our earlier tally put the possible total near $85 billion in taxpayer dollars. If GM were to receive $30 billion in addition to the $16.3 billion that GM has already received, it would push the new total to more than $100 billion. We'll have a much better idea after June 1.
Other links this morning:
As GMAC Gets More Aid, Bailout Becomes One of Nation's Biggest (WaPo)
Brought In to Lead AIG in Upheaval, Liddy to Resign (WaPo)
TARP Warrant Sale Shows Banks May Reap ‘Ruthless Bargain’ (Bloomberg)
Board That Punishes Problem Mortgage Lenders Called Ineffective (WaPo)
Geithner Calls for ‘Very Substantial’ Change in Wall Street Pay (Bloomberg)
