Opiniion: Government's GM Plan Requires Political Will

The United States government is essentially taking on the role of bankruptcy court as General Motors works to salvage and restructure the venerable – and now very vulnerable – American business, says Ray Hill, a former investment banker and assistant professor in the practice of finance at Emory University's Goizueta Business School who teaches managerial economics and finance.

"The government has the chance to do it right and help GM avoid bankruptcy, but the question is will they have the political will to do so – for example, can they push the UAW hard enough to bring labor costs into line with the global industry? In addition, can they avoid too much interference with business decisions?" Hill says. "The problem is when political considerations get in the way of good business decisions. For example, you don't want the government telling car companies to make little cars that no one wants."

The government may end up concluding that bankruptcy is the only way to achieve the drastic changes that are required, Hill says.

Winners and losers under the government plan include bondholders, who will lose regardless, but could come out better under the government's plan. If the plan fails, the United Auto Workers have the most to lose under standard bankruptcy laws since they will be in line with other creditors, Hill says.