WASHINGTON (AP) — Sen. Richard Shelby said Friday the government should have allowed the marketplace to decide General Motors’ fate and that the huge federal stake in the company puts Washington on “the road to socialism.”
Shelby, ranking Republican on the Banking Committee, argued that the financially beleaguered GM could have saved “lots of money” if it had chosen six months ago to file a Chapter 11 bankruptcy petition.
“What I worry about” is Washington’s large interest in the company, the senator said in a nationally broadcast network interview. “It’s basically going to be a government-owned, government-run company … a company that has been sadly run into the ground.”
Shelby represents Alabama, a state with a significant presence of non-U.S. automakers, including Honda, Mercedes and Hyundai.
Facing a restructuring deadline, GM is in the process of brokering a last-minute deal with bondholders and the United Auto Makers, and then is expected to file Monday what would be one of the largest bankruptcies ever.
Said Shelby: “I’m sure they haven’t cut enough and there are not enough concessions there.”
The Treasury has loaned GM $19.4 billion and would provide $30 billion in additional financing to keep the new GM operating under bankruptcy protection. The government would get 72.5 percent of the new company’s stock under the plan.