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And I'm Steve Inskeep.
General Motors still has a weekend to try to avoid bankruptcy if it can. GM's patron, the federal government, gave the automaker until Monday to restructure, but it looks increasingly like GM will miss the deadline. It couldn't reach a deal to reduce its debt. So if it can't restructure, the company will have to seek the protection of bankruptcy court. Frank Langfitt covers the auto industry for NPR.
Frank, good morning.
FRANK LANGFITT: Good morning, Steve.
INSKEEP: And what does it mean for an industrial company this big to file for bankruptcy?
LANGFITT: Well, first, you know, this - if this happens, it's going to be the largest industrial bankruptcy in U.S. history and one of the largest ever. Bigger than WorldCom, the telecom company. And only really the collapse of Lehman Brothers, which triggered this deep recession, is really bigger. Now, one way of measuring the size of a bankruptcy is liabilities, what a company owes people. And in GM's case it's estimated to be around 60 billion.
INSKEEP: So the numbers are huge. But there's also just the symbolism of having a company that symbolized American industry or even American technology for a little more than a century.
LANGFITT: Exactly. You know, the bankruptcy here - this isn't just any company. GM's wrapped up in this American love affair with cars. It's been a monument to Detroit muscle, ingenuity, but increasingly, especially right now it's seen kind of as a humble giant.
INSKEEP: So if GM has to file for bankruptcy, Frank Langfitt, how much is this going to cost me?
LANGFITT: Well, Steve, this has already cost you a lot. In fact, the American taxpayers have already lent General Motors nearly $20 billion. The estimates are it'll cost tens of billions more just to keep this company operating in bankruptcy and out. Now, you remember originally these were supposed to be loans, but recently I was speaking with Ed Altman. He's a bankruptcy expert and professor at New York University's Business School. And I asked him how much taxpayers might get back of this money, and here's what he said.
Professor ED ALTMAN (New York University): It's hard to believe that the U.S. taxpayer is going to get it all back. I don't think most taxpayers believe they're going to get much back at all. They're willing to bite the bullet, so to speak, because of the so-called greater good in terms of employment levels. But I don't think most people, including myself, believe that we're going to get this money back.
LANGFITT: And of course, Steve, you know, this bankruptcy at Chrysler, it's gone much more quickly than expected. But GM, it's going to be a different kind of bankruptcy. It's probably not going to move as fast. It's a much bigger company. Chrysler, you know, is mostly a North American company, but GM is global. They make the Opel in Europe, Buicks in China. They also have creditors and suppliers all over the globe. So it's expected to take a lot more time and be a lot more complicated.
INSKEEP: I want to ask one question about that, Frank Langfitt, because White House officials have put out a couple of interesting numbers. They've said that Americans need to buy something like, I don't know, 14 million cars a year just to replace the cars that break down or get too old to use or to deal with population growth. And lately, of course, we've only been selling them at a rate of, you know, nine million a year. The idea is there's a huge demand building up for cars and at some point in the future when people feel more confident, these car companies are going to be make a ton of money. Isn't that possible?
LANGFITT: It's possible. I do think they're right about what they call the scrappage rate, that in fact there is a lot of pent-up demand. At the same time, we may have a ways to go till we see that release. And in the meantime, you know, the United States taxpayer is funding both of these companies. They don't have much revenue. Take GM, the first three months of this year it lost $6 billion. So one of the key things for these companies, even if they get through bankruptcy, they get rid of all these debts, is they've got to start making some money.
INSKEEP: You say both of these companies. Of course you're referring to Chrysler, which has already filed for bankruptcy. Could GM's bankruptcy go as quickly as Chrysler's has gone so far?
LANGFITT: It's going to take longer, I think. As I was mentioning earlier, it's such a big company. It's much more complicated. And the other thing is they haven't got the deals. You know, when Chrysler went in, it had almost everything lined up, everything arranged with its creditors.
LANGFITT: GM has - it may do a little bit of a battle with its bond holders. So it could take longer.
INSKEEP: Frank, thanks very much.
LANGFITT: Happy to do it, Steve.
INSKEEP: That's NPR's Frank Langfitt, who covers the auto industry.
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