If the following is true, GM's bankruptcy is going to cost the taxpayer a lot more than any bailout of GM has cost already:
From Rep. McCotter's website:
Note: According to articles from The Market Ticker
and The Business Insider
, many GM bondholders could hold credit default swaps (CDS) with Troubled Asset Relief Program (TARP) recipient AIG on GM debt. Secretary Geithner has previously stated that, due to the injection of taxpayer dollars, AIG “fully met its obligations” – in sum, it paid 100 cents on the dollar on AIG’s CDS contracts. Thus, if GM enters bankruptcy, GM’s bondholders with CDS contracts from AIG could be assured of getting all their money back – if not more – because the American taxpayer is now guaranteeing these contracts with AIG.
In other words, if GM goes bankrupt, you, as a taxpayer, are going to have to pay even more to bailout AIG because AIG is obligated through its credit default swaps with GM bond holders to make such GM bond holders whole in the event of GM's bankruptcy.
You are going to be forced to funnel 10s of billions more through AIG to enrich AIG's counterparties.