Friday, November 26, 2010

GM's union recovering after stock sale - Non Union Retiree Bondholders Suck Wind

Fortunately, as a retiree, to the best of my knowledge, none of the funds, my 401K was invested in, held GM stock. Many retirees were not so lucky, and lost a good portion of their pensions. On the other side, the union members who are beneficiaries of exorbitant benefit plans, will, according to this article, come out whole or better and expect to get all their "concessions" back once GM becomes profitable.

The bankruptcy that Obama and his cronies engineered, bypassed existing laws and bought union votes with the savings of non-union retirees and money, courtesy of the American taxpayer.

General Motors Co.'s recent stock offering was staged to start paying back the government for its $50 billion bailout, but one group made out much better than the taxpayers or other investors: the company's union.

Thanks to a generous share of GM stock obtained in the company's 2009 bankruptcy settlement, the United Auto Workers is well on its way to recouping the billions of dollars GM owed it — putting it far ahead of taxpayers who have recouped only about 30 percent of their investment and further still ahead of investors in the old GM who have received nothing.

The boon for the union fits the pattern established when the White House pushed GM into bankruptcy and steered it through the courts in a way that consistently put the interests of the union ahead of many suppliers, dealers and investors — stakeholders that ordinarily would have fared as well or better under the bankruptcy laws.

"Priority one was serving the interests of the UAW" when the White House's auto task force engineered the bankruptcy, said Glenn Reynolds, an analyst at CreditSights. The stock offering served to show once again how the White House has handsomely rewarded its political allies, he said.

Perhaps the biggest losers are the investors in the old GM. None of the bankrupt company's previous stockholders got any money, while the claims of thousands of investors who purchased the company's bonds are still being kicked around in a Manhattan bankruptcy court.

"It gives outraged flashbacks to the old GM bondholders," who remain mired in the bankruptcy proceedings and are unlikely to recover more than 30 percent of their investments, Mr. Reynolds said

Read full Washington Times article here.

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