After months of everyone from the Government to the company CEO’s saying that bankruptcies would be the ‘wrong’ way to go because it would forever tarnish the auto industry are now one step closer to that very situation. Chrysler is of course already in bankruptcy and the final push into bankruptcy came on the heels of the President blaming the bond holders.

Now General Motors is expected to file court papers on Monday June 1st. Personally I think it will take place the night before on Sunday evening.

The executives of Chrysler and General Motors kept telling the world that bankruptcy would tarnish their name. I’m sorry, but they tarnished their names a very long time ago. Low quality, over priced, and notorious for poor customer service (just check year after year ‘consumer reports’ rankings). The bankruptcy should be viewed as a blessing by the CEO’s, not a curse.

The time to completely restructure these companies is long overdue. It is unfortunate that it will take bankruptcy to make the necessary changes but it will give Chrysler and General Motors a ’shot’ at being a better company. I said ’shot’ because unless these two companies drastically improve all aspects of their business then the bankruptcies will have been for naught.

Chrysler and General Motors MUST make changes right down to the very core of the business. If they fail to recognize the mistakes they made over the past 20 years then all of the tax payer money being pumped into these companies will be a complete waste. Tax payer money should have never been given to these companies to begin with. And what is even worse is that we will be providing upwards of another $50 Billion to General Motors to get them through the bankruptcy process. The use of tax payer money to bailout and/or rescue these firms from themselves is a disgrace in my opinion.

From WSJ:

The Obama administration plans to usher General Motors Corp. into bankruptcy court Monday and push through a restructuring that will cost taxpayers billions of dollars more than previously envisioned, turning what once was one of the most profitable companies in the world into a government ward. The possibility of a speedy bankruptcy process heightened Thursday after the government altered the terms of the restructuring and offered GM bondholders a sweetened deal if they agree to forgive $27 billion in unsecured debt and pledge not to oppose the reorganization in court.

As part of the revised plan, the U.S. would provide GM with at least $30 billion in financing to carry it through and out of bankruptcy, on top of the $20 billion in loans the government already has given the company. It also agreed to turn the loans into a 72.5% ownership stake in GM — a big bet that could cost taxpayers dearly if the car maker fails to recover.

The filing would set in train an unprecedented experiment in U.S. industrial policy in which the government, from the White House to Congress, will seek to remake an icon of American business while not appearing to bore too deeply into its day-to-day operations. It could be six to 18 months before GM becomes a publicly traded company again, administration officials said.

President Obama instead is expected to announce the government’s plans for GM in a Monday speech that will echo many of the notes he tried to strike in his last two talks on the car industry: that the government plunged into the task reluctantly, but with confidence that it can rebuild GM and Chrysler and salvage at least some of the taxpayer investments.[...]

Like I stated above, unless Chrysler and General Motors can actually build cars that people want; and can regain respect in the auto industry as building a quality and reliable product then all of this will be a waste of time, and of our money.