A regulatory expert says the federal government's plan to continue bailing out General Motors is not only unfair, but also illegal.
GM faces Monday's government-imposed deadline to finish restructuring or file Chapter 11 bankruptcy. The company's offer to bondholders to exchange $27 billion in unsecured debt for 10 percent of the company's stock has failed. The federal government's stake in GM originally was to be 50 percent, but now may be as high as 70 percent. James Gattuso, a senior research fellow in regulatory affairs at The Heritage Foundation, says the 70-percent share is a troubling development both in terms of process and substance. "Which is a staggering share, especially when you consider that the company is being acquired without any vote of Congress, any legislation -- just simply on the White House's own initiative," he points out. After already receiving $19.4 billion from taxpayers, GM will need an additional $50 billion to pay off secured lenders. Gattuso believes the Obama administration will likely obtain that money from the Troubled Asset Relief Program, or TARP, which was created to bail out strictly financial institutions. "If the federal government -- and I'm almost certain that they plan to do this -- plan[s] to take the money out of TARP and give it to General Motors, it certainly is illegal," he adds. Gattuso says he concurs with a recent Washington Post editorial stating that "it is now clear that there is no real difference between the government and the entity that identifies itself as GM." Results from our related pollHow do you feel about the possibility of the federal gov'tholding a majority share of GM - paid for using taxpayer dollars?
GM faces Monday's government-imposed deadline to finish restructuring or file Chapter 11 bankruptcy. The company's offer to bondholders to exchange $27 billion in unsecured debt for 10 percent of the company's stock has failed. The federal government's stake in GM originally was to be 50 percent, but now may be as high as 70 percent. James Gattuso, a senior research fellow in regulatory affairs at The Heritage Foundation, says the 70-percent share is a troubling development both in terms of process and substance. "Which is a staggering share, especially when you consider that the company is being acquired without any vote of Congress, any legislation -- just simply on the White House's own initiative," he points out. After already receiving $19.4 billion from taxpayers, GM will need an additional $50 billion to pay off secured lenders. Gattuso believes the Obama administration will likely obtain that money from the Troubled Asset Relief Program, or TARP, which was created to bail out strictly financial institutions. "If the federal government -- and I'm almost certain that they plan to do this -- plan[s] to take the money out of TARP and give it to General Motors, it certainly is illegal," he adds. Gattuso says he concurs with a recent Washington Post editorial stating that "it is now clear that there is no real difference between the government and the entity that identifies itself as GM."
Results from our related poll
How do you feel about the possibility of the federal gov't
holding a majority share of GM - paid for using taxpayer dollars?
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