No Wonder Bob Corker’s Trying to Play Politics with Spring Hill

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Bob Corker attacked the US automakers for months, arguing they had a failed business model. But as soon as bankruptcy looked likely, Corker suddenly remembered many of his constituents–the GM workers at Tennessee’s Spring Hill plant–work for one of those "failed" automakers. Since then, he’s been pitching the relative merits of Spring Hill. He has gone so far as to suggest that if anything were to happen to Spring Hill, it could only be because of politics.

With sweeping new power the White House will be deciding which plants will survive and which won’t, so in essence, this administration has decided they know better than our courts and our free market process how to deal with these companies.

It’s been a long time since Washington has seen the kind of kowtowing that’s about to occur among members of Congress trying to curry favor with the administration to keep plants in their states open, and it will be interesting to see if the administration makes these decisions based on a red state and blue state strategy or based on efficiency and capable, skilled workers at each plant. If they use the latter, our GM plant in Spring Hill, Tennessee should do very well.

It’s a nice narrative for Corker, one that absolves him of  any responsibility for talking the company into bankruptcy. Yet there’s a detail Corker doesn’t want you to know. 

It’s that the Spring Hill facilities have already been mortgaged away as collateral to secure credit.

Note that GM has approximately $29 Billion in debt; $7 Billion of which is secured by Saturn assets (including Spring Hill, TN plant). The government’s $13.4 Billion loan to GM is also considered secured debt, with a vast amount of assets up as collateral. [my emphasis]

In other words, politics will have nothing to do with the decision on whether or not to close Spring Hill (not that any of you would believe a word Corker says, anyway). That decision will be left entirely up to whatever buyer comes along and buys it, because it will be the first thing liquidated in bankruptcy.

I guess Corker should have thought of that before he joined the plantation caucus, huh?

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20 replies
  1. emptywheel says:

    This also explains Corker’s false heroics back in NOvember, leading hte “compromise” that would have forced UAW retirees to forgo their healthcare or forced UAW workers to work for peanuts.

    If I understand this correctly, the only way to avoid SH from being liquidated is to avoid bankruptcy. But the only way to do that is to have the UAW and unsecured bondholders take huge haircuts on their debt. Which, aside from the fact taht they’re one of his bigger donors, is why Corker didn’t say anything about the dealers making concessions: they’re not creditors, so aren’t the key to avoiding BK.

  2. BoxTurtle says:

    Corker’s Blame Obama position will play well among his core supporters. I’m not seeing much backlash there.

    Who owns the debt that is secured by Saturn? Is it a TARP institution?

    The bondholder meeting tomorrow is critical, but I just don’t see GM’s unsecured creditors forcing them into Bankruptcy unless they’re also holding bets on GM’s failure. And they might well be, that would only be prudent.

    Backruptcy will zero the unsecured creditors and stockholders at least. The secured creditors will hold all the cards because I think they hold all the parts of GM that are actually worth anything. The only things GM didn’t put up as security for loans are things nobody wanted.

    Boxturtle (Only good thing is this will move quickly. GM’s security will lose value every second they’re in court)

    • emptywheel says:

      Click through for the list of all the debt though. The secured creditors (aside from US) only get the Saturn stuff as collateral. We (the taxpayers) get the rest.

      In the end, though, you may be right-that the bets against GM will be the deciding factor.

      • BoxTurtle says:

        I’m not able to figure out figure out who owns the chunk of secured debt that includes Saturn. But I did stumble on to this:

        Reilly explains that the government’s loans to the automakers were initially going to be senior even to secured creditors of GM. That didn’t go down well at all, so a compromise was reached whereby government loans would squeeze in to the capital structure between senior and senior secured debt. But there was a twist:

        In the case of bankruptcy, the government would be exempt from a legal stay, which freezes creditor claims until the court divides up the assets. It also included language saying the government’s loans couldn’t be haircut, as often happens to debts in bankruptcy.

        I read this as the Government would be able to recover their loans while the other creditors were still frozen. Which would seem to mean if ObamaCo wanted to own Spring Hill, they would.

        So even the secured creditors are at risk in BK court. Which means the only winners are those that bet on GM’s failure.

        Boxturtle (GM is playing poker with the debtholders. But the Government may be playing Fizzbin)

  3. bobschacht says:

    Do you mean that inconsequential politicians can’t just say stuff? That stuff they say might actually have consequences? I mean, other than securing the wingnut vote? Horrible horrors, what next?

    Bob in HI

  4. readerOfTeaLeaves says:

    …this administration has decided they know better than our courts and our free market process willingness to let the House, Senate, and SEC basically turn a blind eye whenever Bandar Bush, Russian arms dealer Victor Bout, money-laundering consigliere of drug cartels “Sir” Alan Stanford, or whatever other black market, black ops ‘financier’ wants to send money in and out of the country control a huge part of our economy, which why our ‘legit’ economy is having problems — since we allowed it to be strangled, trampled, raped, and pillaged by the global shadow economy. But I sure would like y’all to keep focused on the Bright Shiny Object of the auto bailout, and listen to me wail about how to deal with these auto companies. Cause that way, I won’t have to do anything scary or difficult like, you know, support global law enforcement and clean up offshore tax havens and have to face down scary sons of bitches like murderous drug cartels and arms merchants.

    Fixed it to suit today’s new Global Shadow Economy reality.

    If DNI Blair has anything to explain about where America’s money is going, or how large a percentage of GNP the Shadow Economy has become, and how that factors in to AIGFP and failing auto companies and looted pension plans, I’d be interested to hear it.

    Think that I might pass on Corker; he’s ignoring much larger, serious problems and if he can’t tell me where the TARP money — a Bush program! — went, and he can’t tell me why credit derivatives are still sold, then I actually don’t give a hoot what the man has to say about much of anything at this point.

    Carl Levin, Sheldon Whitehouse, and Byron Dorgon are kind of turning out to be perhaps the 3 Senators I most respect. If they can put this mess into a larger context that includes the problems posed by the Shadow Banking System that exploded after the repeal of Glass-Steagall and the CFMT in 1999 and 2000, I’d be very interested to hear what they think. Corker, not so much.

  5. freepatriot says:

    I guess Corker should have thought of that before he joined the plantation caucus, huh?

    the repuglitards are gettin to sound like a question on an aptitude test

    Match the Moran:

    repuglitard “blank” should have thought of “that” (fill in the PR disaster) before “blank”

    match the repuglitard with the public relations disaster situation and the event that proved the hypocritical spin:

    A, booby jindal
    B, sarah palin
    C, larry craig
    D, boob coorker

    A, supporting abstinence only sex ed
    B, complaining about lazy auto workers
    C, complaining about something called volcano monitoring
    D, adopting an angry anti-gay ideology

    A, ya got caught tapping your toe in a well known gay bathroom stall
    B, your daughter got knocked up by a high school dropout
    C, you learn that auto workers are your constituients
    D, a volcano erupts in the flight path of a major airport

  6. Leen says:

    How much would Corker love it if the Obama administration got stuck with the you sank the auto workers bus Obama. How would that effect the next Presidential election? Or upcoming mid term elections?

  7. Rayne says:

    But don’t you think Corker is just putting on a nice little tap dance in the flames at this point?

    He doesn’t have to worry about running for nearly 4 years; by then all the chips will have settled into place, some other foreign car company will have snapped up Spring Hill or the entire place sold for scrap and that’ll be that. He may lose some potential voters, but the benefit to him is that the loss of union jobs decreases the likelihood that unions would organize against him because they will not have as large a stronghold in TN.

    From this perspective, Corker’s sudden enlightenment is performance art.

    • emptywheel says:

      Well, he’s gonna be running in 3 years.

      But I think he was just having so much fun getting all that stupid coverage for his “leadership” on the attempted bailout in November, he didn’t really expect his stupid (in his mind) constituents to hear what really went down at 10 pm in the Senate.

      • Rayne says:

        You’re right, I miscounted (2008 on the brain), it’s 3 years before the race begins in earnest.

        What we need to do is find some moderate Republicans in TN to primary the bastard, make him run very hard and blow lots of cash, then force him up against a centrist like Harold Ford again (which would likely force Harold to the left).

        Also need to look at the optimum game plan for Saturn — ideally, there’d be a buyer who’d already be a union shop or one that would be unionized.

        And then there’d be hell to pay, no more performance art for Corker, just butt kissing.

  8. freepatriot says:

    I consider the entire “Act” of the repuglitards for the past 40 years to be “performance art”

    I don’t believe there is a sincere bone in the repuglitard closet

    and off-topic Upon Further Review:

    Water Dog my ass, It’s a fookin poodle …

  9. perris says:

    secured by Saturn assets (including Spring Hill, TN plant). The government’s $13.4 Billion loan to GM is also considered secured debt, with a vast amount of assets up as collateral. [my emphasis]

    see that?

    a “sercured loan”

    this is a pet peeve of mine, I’m sorry but a loan is nota bail out, a secured loan carries little or no risk and I don’t know why even progressives keep calling this a bail out

    the banks got free money which WAS a bail out.

    one of these things is not like the other

    • freepatriot says:

      you need to give up with the links to freeperland, dude

      you suck at posting links, and most of us don’t really care to visit freeperville all that often

      I’m the only freep allowed round these parts

      (wink)

      • MrWhy says:

        Saw the same problem w/ another post. Look at the URL selected in your browser, I get …102×3831354, replace that with …102×3831354 and it works.

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