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Report: U.S. government to own post-bankruptcy GM, forgive $15.4b in loans

by Drew Johnson

General Motors will likely follow Chrysler's outline for bankruptcy, meaning the "˜good' parts of GM will be sold within 30-60 days to a new entity while the "˜bad' GM set will remain in bankruptcy for years. However, whereas the new purchasing entity for Chrysler will be Fiat-led, a new report indicates the United States government will take the lead in the new GM.

In order to spend just 30-60 days in bankruptcy, GM needs a purchasing agent on the other side. For Chrysler that agent will be Fiat, but GM has no such plan in place with another automaker. Instead, the U.S. government will be forced to step up to the plate and purchase the new GM.

According to a Reuters sources, the government will at least initially own the new company that in turn owns GM. The source didn't reveal how much the deal will be worth, but the U.S. government will undoubtedly have a larger share of GM than the 50 percent stake discussed earlier this year.

Additionally, the government's ownership will likely see GM skipping out on the repayment of its $15.4 billion emergency loan. The government will also extend GM a new line of credit.

With bankruptcy seeming like the only outcome for GM, it looks like the Detroit automaker will be government-owned - and debt free - by August.