The U.S. government is officially in the auto business.
General Motors, the century-old auto-manufacturing behemoth, will file for bankruptcy protection today in an unprecedented agreement that would spare the company but give the federal government amazing new powers over a major company. The U.S. government would inject a staggering $30 billion into the floundering firm, giving American taxpayers a 60-percent stake in GM.
President Obama is scheduled to announce his support for GM's restructuring strategy at the White House this afternoon. That address will be followed by a New York news conference held by GM President and CEO Fritz Henderson.
The $30 billion investment in taxpayer dollars is in addition to $20 billion taxpayers already anted up. The money – part of the $700 billion rescue fund for the financial sector – is to help the cash-strapped company get through the Chapter 11 proceeding and onto its restructuring plan. The proceeding is expected to last from 60 to 90 days.
In the long run, GM and administration officials say, General Motors will be smaller and more efficient. There will be fewer plants and dealerships, and there will be only four core brands –Chevrolet, Cadillac, Buick and GMC.