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GM has submitted its bailout plan, which you can read here. Much of it looks pretty good. GM will focus on four core brands: Buick, Chevrolet, Cadillac, and GMC. Pontiac is getting downsized, Hummer and Saab are probably getting sold, and Saturn is likely on its way out, too. Executive compensation goes down to a dollar a year for the CEO. And there's a Federal Oversight Board to watch, and at times, guide, the restructuring. As Justin Fox says, this is more important than it might initially seem:
Much of this restructuring, it seems, will depend on the persuasive ability of a "Federal Oversight Board" that GM wants Congress to create to "support and facilitate an expedited, Administration-led, successful restructuring, ensuring that taxpayer investments are fully protected." This oversight board will be expected not just to reassure Congress that taxpayer money isn't being wasted, but to persuade GM stakeholders to accept concessions that GM management is incapable of securing on its own. For example, after describing how it hopes to convert a lot of its debt to equity, and work out some kind of deal to delay its payments into the new retiree health care trust run by the UAW, GM adds: "Oversight Board involvement may be necessary to be successful." The oversight board will also be expected to make sure executive compensation doesn't get out of hand. Basically, it will play the role of bankruptcy judge. Which is what a similar board did for Chrysler back in 1979.In other words, GM is asking the government to play the Heavy. Justin, who gets this stuff better than I do, sconcludes, "I'm not sure any of this stuff is gonna work, but as a taxpayer, a former Saturn owner, and the satisfied renter of a gray Chevy Impala (dull-looking, but it drove great and the trunk was huuuuge) over the Thanksgiving weekend, I say let's go for it. It's a lot cheaper than AIG, and you can fit more stuff in the back." Jon Cohn, who is also smarter and better informed than me, hasn't offered his verdict, but notes that without a GM bailout, Ford, who is in substantially better shape, will probably get dragged by their implosion.
