Friday, December 12, 2008

Detroit

I have said it before in this blog, but why can't the federal government offer a line of credit as a part of a Chapter 11 bankruptcy plan? I am not a lawyer, so don't understand the issues that well, but I do understand that we have this mechanism which is set up to specifically deal with Detroit's situation. The benefit of Chapter 11 is the restructuring of all of the obligations the companies have. The drawback in this case is the worry over the companies ability to raise capital in this credit crunch. So, why don't the feds just act as that type of lender and let the bankruptcy court do its thing (and do away with the micro-managing by the government, especially the odious "Car Czar" idea).

There must be something wrong with this line of thought because it is so obvious and yet not being talked about.

What am I missing?

1 comment:

NegAmd said...

Here in America we only make someone the Czar an issue when we intend to mess it up.

It looks like the Treasury is pursuing some form of prearranged bankruptcy for GM and Chrysler with taxpayer funded DIP financing.