Oct 8, 2007
The UAW tells its retirees that “Even if GM were to someday file for bankruptcy, the money in the VEBA would be secure.” Secure? How about the GM stock that the UAW intends to stuff the VEBA fund with? How secure would GM stock be in a GM bankruptcy? How secure would the unsecured 4.4 billion dollar “convertible note” that GM intends to give be?
This fund is so loaded with GM promises to pay that the UAW and GM will have to petition for a federal court exemption from the 10% rule. This rule prohibits any retirees’ fund from holding more than 10% of the retirees’ own company’s stock, bonds, notes or other holdings. But the VEBA agreement with GM shows that perhaps as much as 20 could be in GM securities.
If the UAW were truly worried about a GM bankruptcy, would it take all this potentially worthless GM paper?
Talk of a future bankruptcy is only a way to let GM dump its responsibilities for medical care today.