GM will get its $4 billion loan payment from the government today but the company is nowhere near being off the hook.
Bloomberg reports that GM must also present a progress plan to the U.S. Treasury tomorrow that shows progress in cutting labor, debt and other expenses to prove the automaker can restructure to become viable and repay the loans by the end of 2011. If GM doesn’t show progress, the loan terms allow the government to recall the money or force the automaker into a government-supported bankruptcy.
Now that sounds like a much more reasonable stress test to me than the bank bailout plan. Fair’s fair. If you can’t survive then it’s reasonable to file for bankruptcy. But effective nationalization…well that’s neither here nor there!