GM FEDERAL HELPERS ( aka AL CAPONE) GIVE CREDITORS A DEAL THEY CAN NOT REFUSE-JUST LIKE IN THE MOVIE!

GM took the FEDERAL help, to "help" it weather the time of losses by getting time to propose a financial restructuring. The FEDS have provided it with $27 BILLION so far of helpful loans to continue operations. The real house of cards is in the making.

GM was supposed to present a plan for its own recovery as a condition of receiving more aid; it was insufficient.

Now the FEDS have taken a page out of the screenplay from the GODFATHER movie, and given the creditors of GM "a deal that they can not refuse."

The Feds have proposed that holders of $27 billion in existing bonds, "exchange" them for a 10% equity stake in the new GM business, while the FEDERAL $27 billion in loans be exchanged for a 50% equity stake. Nice deal, if you have a gun to your head.

The UAW would "give up"claims" calculated at $20 billion, and would receive a 39% stake in the new business.

Finally, the existing stockholders, those people who actually provided all the capital over the last 80 years or so, would receive a 1% equity stake in the new business.

So this is the price for the government help-push out all the free market loans aside, push out the stockholders and elbow-in the government and the unions for a 89% ownership interest.

GM's CFO said that if the various debt/bond holders do not accept this plan, he would ask a bankruptcy court to cram down this plan in any bankruptcy reorganization.

As a side note, many of the bonds and debt held is held by banks that are themselves part of the FED's "helping hand" program, so please explain to us how exactly does this work?

At a news conference in the Detroit suburb of Warren, several bondholders from as far away as Colorado said holding stock in a newly restructured GM doesn't compare to the bond interest payments they rely on to supplement their retirement or pay property taxes or medical bills. They also said they can't afford to lose the principal they lent to the company.

"We're concerned that small bondholders like ourselves have been left out of the dialogue," said Dennis Buckholtz, of Warren. "That doesn't seem fair."

GM is offering bondholders 225 shares of stock for every $1,000 in bonds, but analysts say those shares will be diluted when the government and the United Auto Workers get new equity in the company.

GM's plan would give the UAW a 39 percent stake in GM if the union takes about $10 billion in payments to retiree health care trust in stock. The U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.

That's expected to leave the bondholders with just pennies on the dollar for their 10 percent equity stake. Common shareholders would end up with about 1 percent of GM.

GM has until May 26 to convert 90 percent of its $27.5 billion in outstanding unsecured notes so it can receive billions more in federal aid and avoid filing for bankruptcy protection.

The taxpayers give money to GM, then GM converts that money into worthless stock and the banks keep the money they got...say again?

Word of advice, don't take the money when it's offered, when someone says, " I'm from the government, and I am here to help."

Now let's look at the heavy hand of government at Chrysler which had hedge fund managers accused of ripping off the taxpayer. What a joke, managers who wanted the best return for their SECURED positions were arm twisted by the Al Capone's of government to accept a crappy deal for their investors, just to help the free spenders in our government.