Automakers to Taxpayers: Can We Get Another Bailout, Please?
David Weinberger /
A recent GAO report warns that GM and Chrysler may need even more taxpayer money. This comes after GM and Chrysler received the overwhelming bulk of an $81 billion auto bailout under TARP.
The report finds GM and Chrysler may have unfunded liabilities for their pension programs. These obligations could have been terminated if these companies had filed for a typical bankruptcy. They were maintained, however, after the government assumed sponsorship during the most recent crisis. Should these companies be unprofitable, these unfunded liabilities will be unmet by GM and Chrysler as soon as 2013.
The report explains why:
Officials at the Department of the Treasury, which oversees TARP, expect both GM and Chrysler to return to profitability. If this is the case, then the companies will likely be able to make the required payments and prevent their pension plans from being terminated. However, if GM and Chrysler were not able to return to profitability and their pension plans were terminated, PBGC would be hit hard both financially and administratively.”