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A Sad, New Day for General Motors

This is a rush transcript from "On the Record," June 1, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: GM filed for bankruptcy. Now it's on the fast track to restructuring. And get out your wallets because GM wants more money, $30 billion more. So now you will have loaned GM $50 billion. Is this the answer?

Earlier today, we spoke with GM's CFO, Ray Young.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Mr. Young, nice to see you, sir.

RAY YOUNG, GM CHIEF FINANCIAL OFFICER: Thank you, Greta.

VAN SUSTEREN: Mr. Young, who is going to run General Motors?

YOUNG: Well, they -- we will have a reconstituted board of directors who will provide oversight to the management of General Motors. And the new General Motors will be led by the management team of General Motors.

And we will be accountable to the new shareholders of General Motors, being the U.S. government, the Canadian government, the UAW Viva, and the existing General Motors who the unsecured bondholders will have a large stake in it.

VAN SUSTEREN: That sounds like sort of a plan, but I am not totally convinced who actually it's going to be.

Let's start with the board of directors. Who is going to be this reconstituted board of directors? Because, frankly, my guess is that we would like to see some new faces since the old faces did not exactly put this company in good shape

YOUNG: First of all, Kent Kresa, our chairman, is in the process of interviewing and selecting new member for the General Motors board.

And what is very interesting is there is a lot of interest in terms of various people who would like to join the General Motors board of directors in order to help the new General Motors.

But I do believe that going forward to with reconstituting the General Motors board of directors with a majority of them being new faces, we will be able to benefit both from the experience of some of the members of the existing board as well as new thinking from new board members, as well.

VAN SUSTEREN: I will tell you how I feel. I am just one taxpayer of many taxpayers. But when you talk about a reconstituted board, I would like to see all of them, not just a bunch of old ones who were kept around and some new ones. I would like to see all brand new.

Secondly, I'm not so impressed that they've been supportive, because they've been supportive -- we've already lent the company $19 billion, and that didn't work. That started last December. So that didn't work.

You want $30 billion more. So it seems to me like I am not looking for a board that is taxpayer that is supportive. I am looking for new blood, and not just Wall Street types, but some people who actually know how to sell cars.

YOUNG: What's interesting is over the course of the past couple of years, we have brought in new faces into our General Motors board of directors.

For example, Mr. Neville Isdell, who is the former CEO of Coca-Cola, is a recent addition to the General Motors board of directors, and he is providing a lot of new perspectives to us, especially in the area of marketing.

VAN SUSTEREN: That is interesting, except that Coca-Cola is something that has a formula that has not changed since it first hit the market I do not know how many hundreds of years ago.

And I talked to a man named Jack Fitzgerald who owns a couple of dealerships out in Maryland, and my guess is he would not be too impressed, because selling cars are not the same as selling Coca-Cola. Cars have to change every year and to meet environmental standards, designs, tastes, and everything else like that.

And his criticism as a dealer who has been in the job for 50 years is that you put people on the board who are whiz kids on Wall Street, but they do not know how to sell a car.

And so this idea of bringing in someone who sold Coca-Cola, who is probably a very smart man, to try to sell a car, it still is -- tell me more. Tell me more of what you have got coming. Maybe you have some other ones who might be more impressive, at least to me as a taxpayer.

YOUNG: Well, Neville has been a tremendous addition to the board. I think a lot of the marketing concepts would be applicable in terms of a consumer product company such as us. And we really are a consumer product company when you think about it.

But, again, Kent has a list of different people who are very much interested in helping General Motors succeed. We will let the process unfold over the course 30 days in terms of understanding what other members will be joining the new General Motors board.

I am very confident, Greta, that the new board will provide the right direction for the team, and to insure that we deliver a return on investment to the American taxpayers.

VAN SUSTEREN: Were you equally as confident last December when you got your first chunk of money, a loan from the government -- I do not know how much you got. Last December, you got $13.4 billion. What did you do with it?

YOUNG: Well, Greta, I was personally involved in the negotiation of that particular $13.4 billion with the U.S. Department of the Treasury. And that was meant to be funding for the period for the first quarter of 2009.

As you know, the first quarter has been a difficult quarter, and we basically shut down our plants for the month of January in order to adjust production.

So that loan was meant to be a bridge until the end of the first quarter, where we could basically submit a full restructuring plan to the government in order to determine how we were going to basically change the company.

VAN SUSTEREN: That was for the first quarter. December 31, $13.4 billion. April 22, you got to $2 billion more. What did you do with that $2 billion?

YOUNG: Again, with the industry running at about a 9.5 million unit level, it's fair to say that in our North American operations, we're suffering negative cash flow, negative operating cash flow burn. So therefore, a lot of this funding in the first quarter and second quarter was really to cover our negative working capital requirements.

VAN SUSTEREN: So as of now it has been $19.4 billion as you go into bankruptcy. You are expecting another $30 billion, which will bring it up largely $50 billion.

Maybe you should have gone into bankruptcy in October. Do you think that would have been a smarter idea for the American taxpayer if you had been pushed into bankruptcy last October?

YOUNG: I guess one thing I have learnt through the process, Greta, over the last six months is to prepare for a bankruptcy takes time. We were not prepared to do a bankruptcy in the fourth quarter of last year. In fact, we actually started a contingency planning process in the month of November and December for our bankruptcy.

And, frankly speaking, Greta, in order to prepare for this possible filing, we needed all this time to understand what we would do if we were to go through a bankruptcy process.

VAN SUSTEREN: A couple of quick things. Look, I am all in favor of lawyers getting paid. I am a lawyer. I hope that this doesn't become sort of the full employment act for lawyers. I do not know what you are paying the bankruptcy lawyers, but I can only imagine.

Do you know have any idea what you guys pay an hour, by the way, to lawyers? Do you know?

YOUNG: Well, basically, as you know, Greta, you are a lawyer, so you understand that bankruptcy, there are certain fees associated with it. At the same time, it's very, very important...

VAN SUSTEREN: What have you guys been paying? The reason why I ask this is if the lawyers are getting, for instance, $1,000 an hour, and the taxpayers are, like, dishing out all of this money to save the company. Those are the sort of things that matter to taxpayers.

It may be the right thing to do. I do not know. But I am trying to put a little transparency into how this works out.

YOUNG: As you know, Greta, the bankruptcy court approves the fees to the lawyers and advisors. So we are following due process as we go through the bankruptcy process.

VAN SUSTEREN: That is from here to now. Since you got your $19 billion last December until now, the bankruptcy court is not authorizing those.

So I am sort of curious, trying to get a grip on the way money is going out, because, you know, you are getting taxpayer money put on the line for you.

YOUNG: Again, Greta, as you know, bankruptcy is very, very complicated.

Fortunately, I have not had to go through a bankruptcy process during my career at General Motors. We have learned a lot about the process, and we are very fortunate that we have some of the best advisors helping us get through the process.

VAN SUSTEREN: And I hope you do, and I certainly thank you for appearing on our show. I with you the best of luck, because I think it's really important that the auto industry survives. I just hope that the right decisions are made along the way.

And get yourself someone who has actually sold cars at a dealership on that board. Do not use just the Wall Street whiz kids, because I think the American people want to see some people who have some practical experience help guide your company.

Thank you, sir, for joining us. Good luck, sir.

YOUNG: Thank you, Greta.

(END VIDEOTAPE)


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