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GM CEO Henderson Not Sure of How Many Credit Default Swaps

Update: 10:08 am:

General Motors CEO Fritz Henderson just wrapped up his hour long news conference by noting that he wasn't entirely sure how many of its bond holders had credit default swaps.

A credit default swap is essentially an insurance policy on an investment. In the case of GM, if bond holders have credit default swaps, that means if GM files for bankruptcy they could recover their investments. Such arrangements could make it difficult for GM to get bond holders to accept debt for equity swaps, since some bond holders might do better if GM goes into bankruptcy.

Despite not knowing exactly how many credit default swaps are out there, Henderson said, "It's not something we think is fatal to a bond exchange."


-- Michael Rosenwald


Update: 9:43 am:

A reporter just pointed out to General Motors CEO Fritz Henderson that his company used to be the biggest in the world. So, after the company's troubles are behind it, and it downsizes dramatically, what kind of company will GM be?

"We will be a global company, but the nature of that will change," Henderson said. "We will be lean, flexible, and very customer focused. I'm more focused on getting results than being big."

Henderson pointed out a fact the company has learned the hard way recently: "It’s been my theory over time that big is only good if you use to your advantage."

GM got too big, and now it is shrinking.


-- Michael Rosenwald

Update: 9:31 am:

Fritz Henderson, GM president and chief executive in a press conference going on right now, just outlined some details of the company’s restructuring plans.

“The objective is not to survive, the objective is to develop an operating plan that allows us to win,” he said.

He said GM will phase out the Pontiac brand by no later than 2010 and the company does not expect to build Hummers, Saabs and Saturns beyond 2009.

Instead, the company will focus on what Henderson said are its “four core brands,” which are: Chevrolet, Cadillac, GMC and Buick.

“We need to have a more sustainable business model because, candidly we only want to do this once,” he said. “We want to have this as truly a defining moment for our company.”

On Pontiac, Henderson said he believe car brands need to play offense, not defense, to win. "We didn’t have a strategy that would allow us to win with the Pontiac brand. We didn’t have the resources nor could we provide the marketing muscle behind the brand," he said.

He said the decision to discontinue Pontiac was "a tough decision, but one of many...This is a brand that has a considerable heritage within our company."

--Sara Goo

By Sara Goo  |  April 27, 2009; 9:17 AM ET
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Comments

I am in the market for a small to mid-size SUV. I am trying to find a good enough reason to purchase a GM, Ford, or Chrystler SUV but my research keeps steering me away from doing so. The consumer reports, edmunds, and other independent sites give average to poor reviews on the vehicles. I am not impressed with the fit/feel and other characteristics of their vehicles. They are so subpar to Hondas or Toyotas.

It breaks my heart that so many people are being let go because of the lack of sales and downturn of the economy but I cannot justify buying a vehicle that has a cheap interior, poor resale value, and only average acceleration and reliability.

Posted by: anicole72 | April 27, 2009 11:16 AM | Report abuse

Sub-par to Honda and Toyota, not quite!
But...that's the perception of most non-car people but I guess the most people fit that category. As a mechanic, I work on all types and GM is built the best where it counts, as far as what I have seen in the last 10 years.

Posted by: BQUICK | April 27, 2009 5:11 PM | Report abuse

I agree with BQUICK. I had a GMC Yukon for 13 years and 172,000 miles. The only major was a transmission rebuild, and regular maintenance was minimal. The truck is still going strong and the interior never had issues. 1993 Corvette. 183,000 miles and the only "major" was changing the distributor, which I can be blamed for not doing things right. Again, low cost maintenance and no issues with interior or other fitment issue. I now own a newer Corvette (old one was destroyed by a Toyota driver) and a GMC Sierra (needed a bigger truck to pull the 30' travel trailer). Both cars are strong and only a problem with one of the visors in the Corvette. When I pop into a mechanics shop, I do NOT see GM products there for serious work. Oh, did I mention I also have a Saturn. 1996 SL1 with over 110K miles. It has been through 2 kids learning to drive a manual transmission and the only issue is a burned out clutch. Not bad for a "KIA priced" car. And the big bonus is that I get to know that I am helping keep jobs in the US AND have quality rides.

Posted by: SoCalBob | April 27, 2009 5:45 PM | Report abuse

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