My stomach churns every time I hear President Barack Obama tell me
that he saved the auto industry. And
this week in the Vice Presidential Debate with Congressman Paul Ryan, Vice President Joe Biden made the following
remarks when discussing how he and the President “helped” the economy:
We immediately went out and
rescued General Motors. … when that occurred, what did Romney do? Romney said,
“No, let Detroit go bankrupt.” (The Washington Post Transcript)
Biden’s assertion is clearly that the Obama Administration
saved GM from bankruptcy, when Mitt Romney wanted to supposedly usher it to the grave.
What the Obama/Biden ticket fails to accurately disclose is
that General Motors did, in fact, utilize Chapter 11, Section 363 of the U.S.
Bankruptcy Code to reduce its liabilities and get a fresh start. But don’t take my word for it, read its own
words from the General Motors' 2010 Annual Report (my emphasis):
Our company commenced
operations on July 10, 2009 when we completed the acquisition of substantially
all of the assets and assumption of certain liabilities of Old GM through a 363
Sale under the Bankruptcy Code. As a result of the 363 Sale and other
recent restructuring and cost savings initiatives, we have improved our
financial position and level of operational flexibility as compared to Old GM
when it operated the business.
The annual report explains that as part of this 363 Sale a
new entity named NGMCO, Inc. was formed and “acquired substantially all of the
assets and assumed certain liabilities of General Motors Company.” This entity then went so far as to change its
name to – take a guess – General Motors Company.
The next step in the transaction was for the existing
General Motors Company (“Old GM” according to the company’s own words) to change its name to “Motors Liquidation Company.”
Creative, huh? The
company formerly known as General Motors Corporation continued to exist until
the remaining assets and liabilities could be liquidated, and from General Motors’ 2011 Annual Report we learn that, “On December 15, 2011 MLC was
dissolved.”
Wait, wait, wait; walk that back again. Biden puts Romney on blast for wanting to
“let Detroit go bankrupt.” Not the city
of Detroit itself (although it could probably benefit from bankruptcy as well…
I digress), but specifically General Motors.
So the genius alternative to bankruptcy that Obama/Biden are
taking credit for is to let General Motors utilize provisions in Chapter 11 of the
U.S. Bankruptcy Code to sell its assets to itself.
Here it is again in Crayola:
Obama/Biden saved GM from bankruptcy, by letting it go through – say it
with me now – BANKRUPTCY!
The only difference was that Obama’s version puts the
American Taxpayers on the hook for 500 million shares of GM stock. The break-even share price on our (the
taxpayers’) investment is $53.00 per share.
What was the last closing price, you ask? Get ready… you may want to sit down for this:
$24.44. A little public school math
tells you that figures out to an unrealized loss of $14.28 Billion dollars.
OUCH! No wonder Joe Biden was so angry the other night:
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