Obama plans to convert GM loan into gift

Look on the bright side. We’re going to own a car company! What could possibly go wrong?

NEW YORK, May 19 (Reuters) – General Motors Corp’s (GM.N) plan for a bankruptcy filing involves a quick sale of the company’s healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source…

…In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.

My question is simple: what has GM done to prove it deserves loan forgiveness? According to the story, they still haven’t presented a restructuring plan and in this economy, auto sales are down across the board, which means the profitability we were promised isn’t coming anytime soon, if ever.

My first thought was that it might be to ease the pressure on the UAW, who will soon hold a majority stake in the company, but Ron Gettelfinger sounds increasingly less than thrilled about owning GM. So again, what’s the rationale?