Bloomberg is reporting that the Federal Government may face Chrysler and GM into bankruptcy to ensure that these companies return the 17 billion in bailout funds they were lent last year. The issue revolves around the subordination of the companies debt. Right now, several big banks like Citigroup and Chase are first in line. However the Feds may have the option of forcing the companies into bankruptcy to ensure the taxpayers money is returned.
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For my part, if the federal government is even considering a structured bankruptcy of these companies, why did they bother with a bailout in the first place? It seem to make a little sense to give detroit money to avoid bankruptcy, then demand they go bankrupt to be sure the funds are returned.