General Motors Workers Anticipate Bonuses While Former Investors Are Left to Eat Cake

Stockholders and Bondholders in the "Old GM" Remain Wiped Out While the Company is Awash in Cash

With the news that General Motors workers can expect bonuses of as much as $7,000 early next year, I wonder how stockholders and bondholders of the "old GM"  feel. 

President Obama boasts of his rescue of the American auto industry.  Assuming for the moment that it was appropriate for the government to take over a private business and to oversee its reorganization, was it just and honorable to wipe out those that purchased the stock and bonds of the company, including individuals that depended on dividend and interest payments from their "safe" investment?

The fact that General Motors is now flush with bonus cash demonstrates that its government takeover should have looked out not only for those that provide labor to the company, but those that placed their capital at risk. Former GM investors had the rug puled out from them, a raw deal.

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Mark Trombetta December 23, 2012 at 07:59 PM
Oren, my friend: That is only a more than 50% loss of taxpayer funds. By Obama standards that ain't bad!
Oren Spiegler December 23, 2012 at 08:42 PM
You are correct, Mark. The creation of "Government Motors" cost us an amount that is peanuts to this administration. The credo is, "If we must bring the country to the point of insolvency, who cares so long as "the greater good" is pursued"... and who cares about those "pesky" shareholders and bondholders that lost their shirts?
Roger December 24, 2012 at 12:18 AM
When I read the WSJ article on Friday, I had to reread to be sure I was understanding what was written. While a huge chunk of money remains outstanding to the Feds ($25B?), some in GM are getting bonuses. As I read the story, this is a mandatory bonus arrangement that was part of the UAW contract. I know there was lots of political hay in the wind when MI legislature voted for "right to work," this helps the general public why many wished MI to be a RTW state. This helps justify the recent vote, and signing of the bill. Also, this bonus payment will be great fodder for those highly critical of management getting bonus money, those greedy ones taking a bonus, those who are charged with managing the company and being responsible to stockholders. With his revelation, the fodder can be thrown in the other direction - in the face of huge losses by GM, bonuses are being paid to workers. In the words of objectors on the other side, "Why do they get paid extra money, when others are taking the losses." I wonder how well GM would be doing if they went through bankruptcy like others, emerged stronger on the other side, and regained a foothold, AND had support of consumers to buy their product. How many of us are sitting on the sidelines in the game of GM products, never to buy a GM product again? Lots!! Just think if we bought GM products again, like we once did. The bonus money might be lots more!
Jason Bahr December 24, 2012 at 06:00 AM
I’ve always been a car guy for as long as I can remember and prior to 2008 – I never drove anything that wasn’t a GM Product. I’ve liked every GM product I ever owned and it felt kind of nice to “Buy American.” Should the Federal Government have intervened? To some extent – perhaps. Should the Federal Government have thrown out 100 years of bankruptcy laws to do it? I have a problem with that. Where do I stand now? Since 2008 my wife and I have purchased 3 new cars from 2 non-US (non United Auto Workers) manufacturers and the conclusion? Very pleased with what we bought. In the grand scheme of things my actions mean nothing. No one cares what I do or what I drive. I can’t impact GM’s bottom line. But I’ll tell you something. I found 2 new manufacturers whose products I really enjoy driving and owning. Will I ever go back to GM? There are some fantastic car manufactures out there. It was great while it lasted, but I’ve moved on. I am NEVER going back. I have a feeling - I am not alone. We'll see . . . .


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