With GM bondholders refusing to strike a deal, Washington finally grows a pair (or, more likely, pretends to, as a negotiating ploy):
Bloomberg: “We’re not going to simply hand out dollar bills on Pennsylvania Avenue,” [car czar Steve] Rattner said, adding that stakeholders might sense “the government will end up solving all problems, and it’s just not going to happen here.”
The U.S. has set a March 31 deadline for GM and Chrysler to submit final plans that show they can return to profit and repay what they borrow. Treasury Secretary Timothy Geithner, the task force’s co-leader, has the authority to extend that by 30 days if necessary. Rattner said the task force wants to keep to the date…
To meet the deadline, GM still needs to reach an agreement with bondholders to pare $27.5 billion in debt to $9.2 billion in exchange for equity. Bondholders “are very effective in looking out for their own interests,” Rattner said.
“I hope all stakeholders will recognise the gravity of the situation and the need for everybody to engage in shared sacrifice,” Rattner added, speaking of bondholders. “But the government cannot solve all the problems of all the stakeholders in this situation.”