GM is claiming all it needs is a “bridge loan,” but the automaker is losing money so fast that bridge would be burned by February, writes Andrew Ross Sorkin in the New York Times. What GM really needs is bankruptcy—but one guided by the government. “Taxpayers shouldn’t fork over a cent, at least until shareholders are wiped out, management is tossed out, and the industry is completely reorganized.” Sorkin goes on to spell out how it should work.
The goal should be to file a productive Chapter 11 bankruptcy—instead of a liquidate-everything Chapter 7. Then let GM and Chrysler merge, and together slash brands (only Cadillac, Chevy, Buick, and Jeep are worth saving), dealerships, factories, and outlandish employee benefits (a move the UAW will be able to stonewall without the bankruptcy). Then the government can invest in the rebuilding, contributing to, in Barack Obama’s words, “a bridge loan to somewhere, as opposed to a bridge loan to nowhere.”