Looking for something more to take out of the hides of workers to satisfy Wall Street, Republican Senator Corker demanded that the UAW take a haircut in the value of VEBA assets to match the write down taken by bondholders.
Unsecured debt of GM is now trading at a significant discount to its face value. Would the UAW be willing to write down the value of its VEBA assets in a similar fashion? Corker wanted to know.
Gettelfinger seemed caught off guard by the question and said he couldn’t reply until he consulted with HIS Wall Street friends, Lazard Freres, the investment bank advising the UAW.
The reality, of course, is that a huge chunk of the assets held by the GM VEBA is in the form of a $4 billion convertible note that is already far less valuable than the day it was issued. It is no stronger a financial instrument than the unsecured debt held by Corker’s Wall Street friends.
So the right answer – which Brother Gettelfinger should have known – is that the UAW retirees are already suffering, right alongside those bondholders, from the travails of GM and the other two auto giants. In fact, that is precisely why the Big Three set up the VEBA’s the way they did – they hardly wanted fixed obligations knowing full well they would need “flexibility” to work through this period of trouble.
It seems that only the UAW leadership is unaware that they too have been caught in the financial collapse in value impacting their industry.