GM Restructuring Run Amok

Larry Kudlow comments on the GM restructuring and believes it's a case of the Fox Guarding the Henhouse.

What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.

That is strange - bondholders usually have a stronger hand at the table, but there's not much they can do if the government dictates the results. Kudlow also has other serious doubts about the independence of Geithner.