GM and Chrysler Bailout Terms

The President announced that the administration would use TARP money to bailout GM and Chrysler.  Ford Motor Company did not make a request.  The "Fact Sheet" from the Bush administration states that GM and Chrysler will receive $13.4 Billion from TARP funds immediately and another $4 Billion in February if Congress approves the second tranche of TARP funds.  There are a series of "conditions", most of which are illusory. Some are not however.  First, the real conditions:  limits on executive pay and perks, warrants for non-voting stock, government debt is senior, government can block any large deals (over $100M), no dividends.  The illusory conditions request that the companies "use the funds to become viable" and set goals and targets for viability.  The condition is illusory because the they are "non-binding," open-ended, and can be reset or relaxed by the Obama administration in January.  Points to consider:  1) There is no strike price or amount set on the warrants and both numbers will be of considerable interest to shareholders. 2) Paulson, once again, has played the fool, arguing that he had no authority to use TARP money under the Congress language establishing the statute (oops).  3)  The targets can only be accomplished realistically (because of the size and complexity of any negotiation) in a bankruptcy reorganization.  You do not exchange debt for equity, reduce wages under a Union contract, and alter existing contracts in a company this size outside of a bankruptcy reorganization (there are too many hold-out possibilities).  Obama will not use bankruptcy so we are in for a penny in for a pound.