BU Now » bankruptcy

GM clears bankruptcy hurdle

Dick Taffe — Mon, 06 Jul 2009 13:56:31 +0000

Saying the only alternative would be liquidation, a federal judge has okayed the sale of GM’s assets to a new government-run agency, paving the way for the automaker to emerge from bankruptcy. School of Management Dean Louis Lataif, a former Ford executive, can discuss the implications.

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

GM’s post-bankruptcy ad campaign

Dick Taffe — Wed, 03 Jun 2009 15:03:30 +0000

General Motors is launching a post-bankruptcy advertising campaign targeting network TV, the Web, and Facebook, with the hook: “We’re not witnessing the end of the American Car. We’re witnessing the rebirth of the American Car.” College of Communication Professor Christopher Cakebread, an expert on controversial ads, can discuss GM’s gambit.

Contact Christopher Cakebread, 617-353-3476, ccakebre@bu.edu

Chrysler bankruptcy “unfortunate”

Dick Taffe — Thu, 30 Apr 2009 19:58:44 +0000

School of Management Dean Louis Lataif, a former Ford executive, says the bankruptcy of Chrysler shows it is difficult for the government to impose financial decisions on private enterprises.

“It’s unfortunate that Chrysler must go through bankruptcy. It seems clear that debt holders, who themselves must answer to their own investors, refused to take only half of what they would receive in a Chrysler liquidation, as the government was requesting. It’s another illustration that it’s difficult, if not impossible, for government to impose anti-market decisions.

“It would have been more defensible if the government would have served as a lender of last resort, granting significant bridge loans for the ailing auto makers. Those loans could have been granted with restrictive covenants that would have required concessions by all the participants — management, labor, debt holders, suppliers, and dealers.

“Then when the auto market inevitably rebounds from this credit crisis, the auto manufacturers would begin repaying the loans with interest, making the taxpayers whole. And the government would not have put itself into the business of running the auto companies — an approach that will assuredly prove to be untenable.”

Contact Louis Lataif, 617-353-2668, lelataif@bu.edu

New oversight for non-bank financial entities

Dick Taffe — Wed, 25 Mar 2009 16:07:41 +0000

Former Deputy Comtroller of the Currency Robert Bench, now senior fellow at the BU School of Law’s Morin Center for Banking and Financial Law, says a new financial receivership regime must be created to permit the orderly “wind-down” of assets at non-bank financial institutions — like AIG and hedge funds.

“Use of existing bankruptcy laws for large financial services holding companies, simply, would be a nuclear event for financial markets and the economy because bankruptcy would freeze financial transactions globally.

“Without a federal regime to orderly unwind systemically important financial holding companies, and to escape the nuclear consequences of the applicability of traditional bankruptcy laws, the only option available is to ‘keep the ball in play’ through taxpayer bailouts.”

Contact Robert Bench, 617-353-5428, bobbench@bu.edu