“Intense Preparations” are underway preparing for a possible GM bankruptcy, along the lines of Geither’s plan – to split the company into a “good GM” and a “bad GM”.
Reading between the lines, it sounds like the decision has been made – in a company as complex as GM, it takes a while for lawyers to write up the paperwork and anticipate possible objections the court or other parties (including countries in Europe) may have.
If GM “goes”, the automotive parts business will likely follow – as well as serious damage to the bondholders (most of the value of the bonds has already been “written off”, but forces everyone to adjust their valuation)
But don’t worry – the Federal Reserve has lots of “money” it can create to keep funding cascading bailouts of the companies that fail.
Tags: federal reserve, Geithner, GM