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June 1st, 2009
09:19 AM ET

Bondholder furious over GM bankruptcy

GM bondholder Debra June speaks to CNN's John Roberts.

GM bondholder Debra June speaks to CNN's John Roberts.

General Motors turns to bankruptcy today in the hopes of finding a new start. The move comes after a majority of those holding $27 billion in GM bonds agreed to swap that debt for a stake in the new General Motors.

Debra June is a small bondholder who six years ago invested $70,000 in GM bonds. She predicts that investment is now worth less than $200. She spoke to John Roberts on CNN’s “American Morning” Monday.

John Roberts: You invested $70,000 in GM bonds some six years ago. As a result of this deal, that is going to be converted to equity shares. What's that investment worth now?

Debra June: Well, what happened, John, I got this booklet at the original thing. This is a 200-page booklet and they sent this in the mail and the offering was two shares of stock for every $1,000. That's 140 shares of stock. They said originally in the booklet it was going to be 225 shares, but as you kept reading the booklet it said they were going to convert that to 101 reverse-split, which would be two shares of stock. $70,000 for 140 shares of stock.

There was no way I was going to take the deal. Then they came out and they sweetened the deal. And I tried to contact General Motors. I left a message with the people I called up. I talked to the people on the phone. I e-mailed two e-mails, “Please let me know what the deal is.” I'm with GM Bondholders Unite, the 60-plus group and also the Main Street Bondholders. What they're doing to the people is ridiculous. It's horrible. You're wiping out common people that saved money. I'm not a corporation.

Roberts: No, you're a school teacher, we should point out. So $70,000 is a huge amount of money to you.

June: It is. It is. And it's a shame. I mean what they're doing, they're saying 10% and this and that. I don't know what they're doing. People out there have saved their money. We've done the right thing. I pay my bills and here all of a sudden, they want to give me two shares. 140 shares of stock.

Roberts: And that stock, all in total is worth about what, $200?

June: I believe so right now.

Roberts: Maybe less than that.

June: Even less. When they regroup, even if the stock was $10. That's unbelievable. I mean I can't imagine someone doing something like that.

Roberts: So Debra, what was your reaction when you heard General Motors was going to go into bankruptcy? You said you resisted this plan, you didn't agree with this. The major bondholders were the ones who said go ahead and do this debt for equity swap. What did you think when you heard they were going into bankruptcy and that was the deal?

June: Well, I'm in shock. When I bought into GM, I thought it's a safe thing. I bought six years ago. I always thought it was safe even when the government came in. I was so excited, I said "Well they’re going to take over." But Obama’s task force, these people came in, they didn't negotiate. We had no say. The private investor had no say in the matter. They dealt with the big corporations. Obama is for the people, he said. How can you be for the people? How can he do this?

Roberts: So do you blame the task force? Do you blame the company, the unions? Who do you blame for getting in this situation?

June: I blame, originally, GM, for letting it go like this. It's like Bernie Madoff was their bookkeeper. It's ridiculous, but also for the task force to come in and not let anyone from the main sector, just a representative to go in there and try to negotiate. They never let us do that. I would have given...I'm not joking on this, I would have said to GM, "Here don't give me any interest, just take that." That would help them immensely… I mean to send this booklet out, the task force actually did this?

Roberts: So do you have any hope of recouping your investment? If this company gets lean and mean and agile, do you have any hope you can recoup that $70,000 and beyond that if the price of the stock goes up?

June: Nothing. Right now, I'm not even in on the new deal, the sweetened deal, I couldn't even get in on it. And that's - and it's in the paper. They didn't care about the people. It's in the paper.

Roberts: So you really feel robbed, do you?

June: I feel robbed. I know that there's an attorney out there for the GM bondholders Unite. That’s the gentleman Thomas Lauria and he's supposed to represent the small people. I hope and pray the judge, whoever gets this, is going to say “Wait, this isn’t right what's happening to the people, it's not right what's happening to the workers.” The dealerships are going to close. It's going to be a trickle down effect but they're taking income from me and thousands and thousands of other people who are in worse shape than I am and it's not right.

Roberts: We'll keep following this and maybe we can stay in touch with you and keep checking back.

June: Please, please people out there – contact your congressman. Do something. Say it's not right. I remember Michelle Obama said she was not proud of her country until her husband was in office. I'm a school teacher. If I was teaching her children, would she say she was proud that this is happening to a common person like myself? I mean you can't, you can't do it.


Filed under: Business
soundoff (700 Responses)
  1. Chris

    Reading the comments above in regards to June STATING her case is admirable. All of you people who left negative comments should be ashamed of yourselves. You should be glad that a common person had the chance to be heard on a major network station. This is not the time to be negative and breed hatred. Yes times are rough out there but I feel that all major corporations including, banks, credit card companies, automotive companies OPEC, and yes THE US GOVERNMENT have had a hand in this recession. No one is clean. I guess they have never heard of preventative maintenance. June I hope you resolve your issues with GM. Good Luck

    June 1, 2009 at 12:44 pm |
  2. Robert Johnson

    JEEEEEEEZ!

    98% of the people on this board are financially DUMBED DOWN.

    LEARN THE DIFFERENCE BETWEEN BONDS and STOCKS.

    Analogy: You have a money market account. You invest half in stock market, leave half with the brokerage to earn modest interest.

    Stock market: You lose or win as the stock goes down or up.
    MM Account: You get a steady x% interest.

    Now imagine, one day Obama comes in to the troubled brokerage. Suddenly, with no negotiations, takes over the brokerage. You have a right to your account and maybe even modest interest. Obama says NO, and takes all of your money.

    THAT is what has happened to this poor woman and many others!

    IT IS NOT ABOUT STOCKS!

    JEEEEEEZ!

    June 1, 2009 at 12:44 pm |
  3. Tommech

    Funny how so many people agree with what she said but as soon as you mention Michelle or Barack Obama then she might as well be thrown to the wolves. What mindless sheep you people are. If everyone feels she deserved to lose this money or it was all her fault than everyone one of you should also be against every bank and corp. bailout. Hypocrites.

    June 1, 2009 at 12:44 pm |
  4. Jon Dough

    No one is commenting on the MASSIVE investment and insurance companies that made horrible derivative investments – and got BAILED OUT by taxpayers. Along come small fry "investors" to get crushed, have normal laws inverted, ............ These are bonds, not stocks and are not being treated by normal bankruptcy procedures. It is true that very basic investment advice was not followed here – diversify. But the consequences for the individual, especially when compared to the elimination of "moral hazard" for the huge players is unconscionable.

    June 1, 2009 at 12:44 pm |
  5. Fred Afar

    Posters, please learn the difference between stocks and bonds before using this public forum to flaunt your ignorance.

    A bond is a formal contract to repay borrowed money with interest at fixed intervals. A bond is nothing more than a loan to a company. Bonds are usually considered a safe and conservative investment vehicle.

    A share of stock means a share of ownership in a corporation. Shares are traded on the stock market and can be volatile and carry significant risk.

    June 1, 2009 at 12:44 pm |
  6. Jim

    The bleeding heart liberal inside me was just killed by the financially conservitive. If you invest you take a risk, even with a savings or checking account (hence FDIC).

    We (the american people) own GM, and it will more than likely be run into the ground by politics. And much like Debra June, we have all been shafted out of cash, because the bailout money no longer needs to be paid off.

    June 1, 2009 at 12:44 pm |
  7. Bonds aren't the stock market

    I am amazed at how many comments condemn this woman for playing the "stock market". She didn't own GM STOCK, she owned BONDS!!! There is a HUGE difference! The number of people on this message board that don't know the difference between stocks and bonds is astonishing. With that kind of ignorance on display, it is no wonder so many people in this country make horrible financial decisions.

    June 1, 2009 at 12:43 pm |
  8. Jonathan

    Bonds for publicly traded companies are not guaranteed to make money and are not risk free. Anyone who states that on this string is ignorant of the facts. NO INVESTMENT IS GUARANTEED unless it is in a federally insured account (ie savings account, CD, govt bond)

    Also to the guy who said Sec Geitner is in China trying to get them to buy US bonds "they don't want"... where do you get your news the Drudge report? What a joke!

    June 1, 2009 at 12:43 pm |
  9. Niki

    I understand that bonds are different that stocks, but when the company is going down the crapper and you are offered a deal, you take the deal!! You don't say "I don't like the deal, I'm going to hold out for a better one" (as the news is reporting ALL usa car manufacturers are going down and are going to be filing banckruptcy in the near future). You made a bet, you put all your eggs into one basket, and you lost. Sorry, you lost a lot of money, but that was your doing.

    June 1, 2009 at 12:43 pm |
  10. RealitySpeaking

    GM was a sure bet.....a sure bet to go under.

    Seriously, why on Earth would you invest in a company that loses $$$$ Billions $$$$ every year and think it was a safe bet? And after the writing is on the wall, you still decide to ride the Titanic into the sea thinking its going to surface? Well its gone under now and you're asking for help. Sorry lady, you mad a bad, bad investment and all the lifeboats are full at this point.

    June 1, 2009 at 12:43 pm |
  11. Joe

    Just to point out, the whole deal with GM is not the government breaking their deal with GM bondholders.

    Sorry Charlie, but GM went bankrupt. No one has to make your bonds good. The bonds are backed by the full faith and credit of the GM company, which after the bankruptcy no longer exists.

    What's happening is GM goes to bankruptcy, the government buys the corpse and creates a new company. If anyone else wants to put a competitive bid for the corpse, they are welcome to it. Since GM has more debts then it has assets, and most of those assets are have a very questionable value (commercial real estate in Detroit and other scenic rust belt locations), the bondholders don't really have much of a case that they are getting screwed.

    June 1, 2009 at 12:42 pm |
  12. Eric B

    Thanks to some of you for my morning laughs. Quite a few people making comments are obviously uneducated or have a mininum of exposure or experience with this matter. I think I even read 3 or 4 comments mentioning this example as the "stock market". Come on, people, there is more than one market. Stocks are stocks, bonds are bonds, and I guess the uninformed are the uninformed. LOL.

    June 1, 2009 at 12:42 pm |
  13. Barbara

    Ms. June was invested in the bond market. Some posts are confusing the stock market with the bond market.
    Not the same ... a very different instrument.

    Bonds have a sustained rate of interest, much less volatility, and don't normally change radically in price. You aren't going to make big bucks in the bond market but you are far less likely to lose what you've invested ... unless of course the management of the company blows it.

    Ms. June's loss is not the result of heavy risk taking ... short of the municipal bond, the corporate bond has historically been safe and reliable ... unlike the stock market.

    All of us who have invested in safer instruments than equities, are quivering, wondering if we, too, will get shafted. Like her we've done the prudent thing, reducing risk in favor of a smaller but steady return.

    What is wrong here is that the national government and all it's wings have failed to see the red lights flashing. I recognized them by about 1985 when mortgages began to be "creative". But a lot of people were pocketing a mess of money for the blind eye.

    I grieve for Ms. June. There is no way to make up for this.

    June 1, 2009 at 12:42 pm |
  14. Skubah

    The "non sympathetic" writers must be either a big part of corporate america or finanacial market entrepreneurs which are thieves themselves anyways. Answer me this hot shots, where did the heaps of profits that the auto insustry had made over the past 70 years go? Not only did they take the profits out of the company to live their life of luxury, they then turned around and claim bankruptsy, forgiving their debts to the hardworking investor. Are you seriously trying to pass on to me that 2 years of tough times can put a business of that size belly up. I went to college too, and I'm not believing that one.
    The CEO's, boardmembers and major investors should have buck up for their mistakes. I bet if you added up the major salaries of GM you could repay mom, dad, aunts, uncles and the teacher who lost out a fair sum of money. Not everything, but more than $200. But what am I saying, this email will get lost, nothing will be done, everyone will get screwed (AGAIN) because it's so hard to have your voice heard these days.

    June 1, 2009 at 12:42 pm |
  15. Aaron (TX)

    Claude Montreal is absolutely correct. One of the few intelligent comments on this thread. The rest of you make me sad for this country.

    June 1, 2009 at 12:40 pm |
  16. Shane

    Vonnie....you are an ignorant moron.

    Michelle Obama stated, " For the first time in my adult life I am proud to be an American".

    So you're an idiot!! I hate idiots!

    June 1, 2009 at 12:40 pm |
  17. S82

    If you want the returns paid on taking risks then you have to take the losses from the risk too.

    June 1, 2009 at 12:40 pm |
  18. whatawank

    "Speculate?… Risk?….. Investing in bonds of GM 6 years ago… is not speculating?… it was in theory a sound investment netting probably a low risk 6-7% yield…. this is what we define as risky greedy speculating?… Open a finance text book sometime."

    That is the second dumbest thing I read today. Low risk at 6-7%? Really?

    June 1, 2009 at 12:39 pm |
  19. dan in Tucson AZ

    This is the risk of investment. GM was in trouble for quite a while, and if you weren't on top of it, I can only assume it is only a small hit to your portfolio. By the look of the background in your picture, it doesn't look as though you are too bad off either.
    Suck it up and thank your republican friends for deregulating the markets.

    June 1, 2009 at 12:39 pm |
  20. Really?

    I can't believe this woman is allowed to teach our children. What an idiot!

    June 1, 2009 at 12:38 pm |
  21. Ed

    What does the bond contract read? Is it valid in case of bankruptcy? If not then it is as risky as any other investment and
    the best you can do is get in line with the rest of the creditors. It's up to the bankruptcy judge now. The government has always sided with business so whether Obama or McCain it would have been the same results.
    In any case blame Congress as well as the Presidents for deregulating banking and making it so easy to commit the fraudulent investments that lead to the debacle. Out with all the incumbents that voted for deregulation in 1999 and allowed it to continue this long. While we've been blinded by terror and fear since 2001, the mob in Wall Street was robbing us blind, all the way to the oversees accounts.

    June 1, 2009 at 12:38 pm |
  22. Jeff H

    Matt's post made alot of sense .... but would bond contracts normally be prioritized before union contracts? Or was this an example of "quick rinse" bankruptcy (e.g. not normal). Thanks.

    June 1, 2009 at 12:38 pm |
  23. Tom

    Luke, while you got the definition of a bond correctly, you forgot to also mention what happens to debt when a company is in bankruptcy.

    Creditors generally have two choices: a) sell company's remaining assets and divide proceeds among them; b) make a deal with a new investors to restructure debt in anticipation that the restructuring of the company would pay off at some point.

    Option a) would not have yielded much (just look at the size of GM's obligations relative to assets) and would have killed the company. Thousands of employees (including dealers) and majority bond- and stock-holders wanted option b), which is what they got.

    So what type of a plan would you have proposed?

    June 1, 2009 at 12:38 pm |
  24. foo

    Tough toots, welcome to the club.

    June 1, 2009 at 12:38 pm |
  25. murthy

    For GM bond holders this is ridiculous deal,What the sin they made and what the UAW did?? UAW gettting freely 10% of the company but people who put their hard earned money getting problems. Totally wrong. Even if they made mistake investing into the GM, still the deal is wrong it should have been given more, How come UAW gets to own the company, Those are the ones they made this into BK otherwise it wouln't have been here

    June 1, 2009 at 12:37 pm |
  26. landshark

    Matt, come on. If the company went completely belly up what would she have?

    June 1, 2009 at 12:37 pm |
  27. Simplyred

    For her to blame Michelle Obama for her speculating in the stock market when the Obama's wasn't even in the White House when she did this was out of line. She took Michelle's comment completely out of context. So everyone is to blame except her, and her poor choice not to diversify, common sense. So if she had gotten rich, and raked in the dough, no one would have ever heard from her. When you take a risk, then you have to be ready to except the consequence of your actions good or bad results. Not blame everyone else.

    June 1, 2009 at 12:37 pm |
  28. jband81

    since when did investing become a sure thing?
    has it happened since i've lost my money in the stock market?! can someone please direct me to the government bailout department for the sore losers in investments?!

    June 1, 2009 at 12:37 pm |
  29. Jim

    You took a chance.

    You lost.

    Don't take chances with money you cannot afford to lose.

    At least you learned a $70,000 lesson, not a $60,000,000,000 lesson like the taxpayers are about to learn.

    Thanks UAW! You bastards...

    June 1, 2009 at 12:37 pm |
  30. Scott Foglesong

    When you invest money you take the risk that you will lose part, or all of your investment. Nothing is permanent, no banking institution or business or nation.

    June 1, 2009 at 12:37 pm |
  31. Dan

    I feel for her loses of money. I made poor investments a few years ago and watching your hard earned money disappear in a poorly run company truly hurts. When I made poor investments, I was upset at the people running the company. Executives continued receiving huge bonuses, salaries, and flew around in corporate jets while the company was clearly being run terribly.

    After that experience, I vowed to never trust someone else's investment advice and instead due my own research.

    I don't understand why she's even mentioning Michelle Obama. Let's see, whether the government stepped in or not, GM was going into bankruptcy. If the government stayed on the side, the rest of the auto makers would steal 90% of GMs market while the bankruptcy drags on for years in courts.

    GM needs to get this bankruptcy resolved or the few assets will decrease in value VERY quickly. No one would buy a GM car if they were going to be in bankruptcy courts for 1-2 years. No one would buy the GM, Hummer, Saturn, etc brands near today's value if bankruptcy courts would last 1-2 years.

    Sorry for your loss. Speaking from my previous losses, anger and pain tend to blur the view of the best path forward.

    June 1, 2009 at 12:37 pm |
  32. chuck

    Just curious, What brand of car does she drive?

    June 1, 2009 at 12:36 pm |
  33. Shaun

    You are not the only person in history to make a terrible investment. Please learn your lesson, be wise in the future, and try to teach (since you are a teacher) people to diversify their portfolios. That is the safest and wisest decision anyone at any age can make. You deserve no recompense, only because if this investment would have proven lucrative, you would not be writing a check to GM thanking them for your profitability. So why should anyone write you a check. The same should apply to the US gov, they should not be writing checks to failed corporations. I, a taxpayer, do not want to invest in this company.

    June 1, 2009 at 12:36 pm |
  34. SP

    I lost $1k in Vegas playing Poker and Blackjack. Gov't please bail me out.

    I lost $100k in my 401k portfolio YTD 09'. Gov't please bail me out.

    I lost $50 in a friendly poker tournament last month. Gov't please bail me out.

    I lost $100k on paper for my $550k house purchase from late 07'. Gov't please bail me out.

    I lost $650 on a wind storm that damaged my house siding. Gov't please bail me out.

    I lost $20 at a raffle and did not get a prize. Gov't please bail me out.

    COMEON AMERICA, ARE A GOOD NUMBER OF YOU JUST GOING TO SIT BACK AND DEMAND ENTITLEMENT FROM THE GOVERNMENT FOR YOUR DIRECTED MISFORTUNES? SHARPEN UP, RESEARCH, LEARN AND DICTATE YOUR OWN PATH. UNDERSTAND YOUR SITUATION AND THE RULES BEFORE ACTING. THEN, BE RESPONSIBLE FOR THE FATE OF YOUR DECISIONS. WHAT YOU ARE ASKING FOR IS NOT PITTY, IT IS FOR US TO REALIZE THAT YOU ARE LAZY AND CANNOT EFFECTIVELY MAKE DECISIONS FOR YOURSELF AND LIVE WITH THE RESPONSIBILITIES FOR YOUR ACTIONS. I AM NOT JUST TALKING ABOUT "JUNE" HERE.

    GO USA!

    June 1, 2009 at 12:36 pm |
  35. whatawank

    This woman is an idiot. Why one would be so highly leveraged in one company is beyond me? Why don't you find someone to sue? That makes sense.

    June 1, 2009 at 12:36 pm |
  36. Harv

    Let's not forget that bond holders are investors making a loan to a corporation with the understanding that they would be treated as lenders in accordance to the law. It's not right and probably unconstitutional to change the rules and bankrupcy laws for GM. If you can change the laws in midstream, no one will buy corporate bonds.

    Don't confuse stockholders with bondholders. Stockholders and speculators. Bondholders are lenders. Under our laws, lenders are protected by the bankrupcy laws.

    June 1, 2009 at 12:36 pm |
  37. Deb

    No sympathy at all. You invest in things like this there are risks! I am sorry that she lost money but that is what happens. She should have invested in Toyota. GM should have changed their business model decades ago!

    June 1, 2009 at 12:36 pm |
  38. blstrahan

    We've all made bad decisions. You made a $70,000 investment a few years ago and it went sour...deal with it. If every investment decision resulted in a gain, well, we'd all be rich. It doesn't always work out the way we want it – stop complaining.

    June 1, 2009 at 12:36 pm |
  39. Mike

    You people are unbelievable and unfortunately, quite ignorant. You don't feel sorry for her? The stock marekt is a dangerouse place? Do you even know what the stock marekt it?

    "She feels entiteled?" – well under the rule of law, she is. She wasn't in the stock market, that would be equity. She was in the bond market, which is debt, secured debt at that. Bond holders accept a lower rate of return in exchange for collaterl.

    If a company doesn't service their debt they go bankrupt and the debt holders are entitled to the proceeds of the dissolution of that company's assets.

    But along comes are new Marxist-like regime and the rule of law no longer applys. Votes are more important than law and a favored voting group as in the UAW gets far more consideration when normal people who have a legal right that is getting trampled. Wake up people.

    June 1, 2009 at 12:36 pm |
  40. Tom

    I personally make it a point not to buy stocks of poorly run companies that make inferior products, but that's just me.

    June 1, 2009 at 12:36 pm |
  41. AK

    Those of you attacking this lady should learn the meaning of "bond" first.

    June 1, 2009 at 12:36 pm |
  42. Mahan

    I am so tired of us as a country looking for another handout! If you can't afford to lose it, don't invest it! I worry about what you are teaching the children you teach – just cry till the government gives you money? i am embarassed to say you are from my country. stop acting like you are stupid, go to work and save your money!!!

    June 1, 2009 at 12:36 pm |
  43. Paul

    too many jumped on these bonds thinking it was a firm 6-7% annual return for ever!......yes initially they were getting that....but how can they realize that a company with a bad business model like GM's which for the last ten years has been loosing money....could ever sustain that type of return......bonds are LOW risk perhaps....but not without risk.....

    did they ever read the GM perspectus showing these operating losses......where have they been the last two years?????? Again.....proper split between bonds/stocks etc...always pays off.......

    June 1, 2009 at 12:35 pm |
  44. Don Retired Gunner

    It is the fault of not only the shareholders like this that expected to get 6,8, or 10% return every year on their investments, but also the unions that demanded outrageous pay and benefits that have forced Detroit to cut costs by producing inferior products that can not compete with foreign markets. Sorry for your luck, but finally after 42 years I wised up and sold my Trailblazer for a RAV 4 and couldn't be happier... My Silverado is next...

    June 1, 2009 at 12:35 pm |
  45. Jay

    All of you idiots are saying she took the risk and now has to pay. Well that is what should happen but once the government used taxpayer money to bail out some people and not others equally it is wrong. All debt holders should have been given the same money per dollar owed. 60%/1$ for unions and .002%/1$ regular investors is wrong. Especially since I and everyone else is paying. If you want to be capitalist then let thing fail that are run poorly. Yes, unions are the death of capitalism. Long live Obama and his socialistic society.

    June 1, 2009 at 12:35 pm |
  46. Sgt. Rock

    To all the posters talking about bonds as "secure" investments. S&P rated GM bonds as BBB in 2002 when Ms. June made her purchase. These bonds were not investment grade when she made her purchase. This was a classic ill-informed investment.

    If you are not sure about your investment decisions, seek professional help.

    June 1, 2009 at 12:35 pm |
  47. Craig Wilson, Toronto, Ontario.

    I have to agree with the rest of the postings. Your bonds are not guaranteed. You made an investment and there are risks associated with that. Whether you are in a bond or a stock, there are risks. While no one wants to see people lose money like that … it happens. It is the market. GM bondholders unite? What about “I held stocks between 2007-2009 unite”? “I owned a home between 2006-2009 unite” … give me a break? I’m sorry, why would YOU have say again in how they proceed?

    June 1, 2009 at 12:34 pm |
  48. Bobby

    For those of you out there that say "it's a risk you took and it didn't pay off" get a clue. This goes beyond unserstood risk. What happened behind closed doors was near criminal. To strike a deal with the same leadership that got GM in this mess in the first place was irresponsible.

    I voted for Obama...and I regret it. He is no different than any OTHER politician...just speaks better than most. He is striking deals left and right with OUR money...DO YOU GET THAT? OUR MONEY!

    I mean...how can anyone offer so much money to a poorly run company AND let those same leaders in that company keep their flippin jobs...Obama is probably more guilty of "I'll scratch your back if you scratch mine". He WILL NOT be re-elected...he has burned too many bridges with common voters like me and he will not get my vote again...PERIOD!

    I say let these companies fail...this is America...where free enterprise and capitalism have helped us grow from the beginning. It is rediculous that GM will get 30B more dollars while openly stating they will get rid of 20K jobs...what's the point of the money? They're in bankruptcy...so they plan on hoarding the cash...paying the big investors...what? There is no oversight by Obama's cronies...and as long as there isn't...his raping us of our tax dollars will continue...we'll never see it back for better use (i.e. teacher salaries, healthcare for children, disaster relief...etc).

    June 1, 2009 at 12:34 pm |
  49. Anonymous

    So we are supposed to feel sorry for this "regular person" who lost $70k by investing in GM bonds. Um, I'm a regular person too, and I don't have $70K to invest in bonds or anything else, and I'm guessing most other "regular people" don't either. How is it that a teacher manages to have that much money to invest in anything? I mean, they're always complaining about how they don't get paid enough, that they're just scraping by, yet she has $70k to invest, and because she "assumed" GM was safe, we're supposed to feel sorry for her?

    June 1, 2009 at 12:34 pm |
  50. mitch

    Investing in GM 6 years ago was foolish for anyone. Their stock had been falling for around 4 years at that point and was going to continue to do so because of rising oil costs while they were still building gas guzzling crap.

    And as a teacher on a limited income, why would you put $70,000 in one investment? That's incredibly foolish.

    I'm tired of the media glorifying and seeking empathy for individuals that have made bad financial decisions like it wasn't their fault. Granted, we all need better financial education as a society but to exonerate people for making bad investments will not improve anything.

    June 1, 2009 at 12:34 pm |
  51. People STop and think whats Really Happening

    The choice here was simple.

    1 of two things could have happend. Either

    1) GM bondholders get all of GMs assets and LITERALLY MILLIONS of people lose their jobs, THEIR PENSION BASED retirements, and the bondholders get more but not full and everybody else gets pennies on the dollar. The company is forced to sell is real assetts in order to pay the bondholders. That means selling the very facilities and equipment that makes their product. Basically a few people keep lots of money and everybody else gets totally shafted.

    Or

    2) The major debt holders are given a stake in the new company, the company sheds half the jobs it otherwise would have, keeps its property (you know the things it uses to make its product), and a larger number of people are happy.

    It hurts, but occassionally goverment really does have to be utilitarian about things and do what is best for the most people. The other option is an aristocracy that lives in fear of its neighbors.

    June 1, 2009 at 12:34 pm |
  52. Your money

    Your money went to overpaid union employees and their retirees. UAW did this to you.

    June 1, 2009 at 12:33 pm |
  53. Eric

    GM bonds haven't been investment grade for a while, have they? Did she think the government would make her whole?

    Oh, please – let the stupid get what they deserve.

    June 1, 2009 at 12:33 pm |
  54. Matt

    This is ridiculous. For all of you saying it was a bad investment, keep in mind that they *changed the rules* when the Gov't negotiated the bankruptcy terms. If this had been a normal bankruptcy then her investment would have taken a far less (if any) hit because she (and other bond holders) would have gotten first dibs. But that was taken away from them WITHOUT THEIR INPUT OR CONSENT!!!! It's the equivalent if you had lent someone money and then were told by someone else that the party you lent to didn't have to give it back but rather they could give something far less valuable back instead. And you had no choice but to take it.

    Bonds vs stock... learn about them before posting here please.

    June 1, 2009 at 12:33 pm |
  55. Dale

    Don't blame Obama for GM's demise. Blame GM Managment, GM workers, UAW etc. But Obama is not responsible. By the way, what kind of fool would invest in GM anyways? They haven't made any decent cars since... umm... 1960s?

    June 1, 2009 at 12:32 pm |
  56. landshark

    RISK, that is what we all are taking. Unless her original investment was 70,00 dollars, she has not lost 70,000 dollars.

    June 1, 2009 at 12:32 pm |
  57. Jeff H

    I appreciate the differentiation about stocks and bonds, but when you're talking bankruptcy it's a whole new ballgame. The judge has the final say on all contracts no matter what – yes? I'm not a bankruptcy lawyer, but it sounds like nothing is taken off the table. But I can see the point of the union getting the priority over bondholders. Still, at the end of the day, GM has been sick for a LONG time.

    June 1, 2009 at 12:32 pm |
  58. ruffian

    Bad things can happen to investments. It's not a 100% win proposition. Period. That's the whole point of having a diversified investment portfolio, to mitigate those risks. To put all your 75000 eggs in one basket is foolhardy to say the least.

    June 1, 2009 at 12:31 pm |
  59. Frank

    Your mistake was that you small enough to fail. Everyone knows that only the pigs on Wall St who steal from the people get bailed out.
    How stupid all these comments are about being aware of the risks involved with the market. AIG, Citgroup, the others knew about the risks too. Except they knew one thing that you did not. The government would bail them out!

    June 1, 2009 at 12:31 pm |
  60. Gerard in NJ

    Get used to it America.........You'll take what Obama gives you and you'll like it.......remember, this is how the left "fixes" problems – nobody gets more, they just take away from those who have anything so that everyone has nothing.....equality, liberal style

    June 1, 2009 at 12:31 pm |
  61. etrade baby

    June, when she's over her misplaced anger, needs to learn basic investing guidelines. Stocks are owning a piece of a company. Bonds are making a loan to a company in exchange for interest. Either way, the underlying strength of the company is in play. And therein lies risk. GM?.. strength?.. even 6 years ago while Toyota and Honda were eating their lunch? As so many others pointed out, risk is managed by diversification and also one thing I didn't see mentioned – dollar cost averaging. Don't put all you have into 1 thing and don't invest in anything all at 1 time. It's your responsibility to manage your money. Fail that and it's no one's fault but your own. Gary, reread the Comment Policy.

    June 1, 2009 at 12:31 pm |
  62. Colin

    I can't help but feel there's a bit more to Debra's story. It would be very admirable of a woman on a schoolteacher's salary to save $70,000 to invest, but surely someone with that sort of discapline would know better than to put all her eggs in one basket and directly invest in one corporation's bonds. Something tells me she, and perhaps her husband, aren't quite as "mainstreet America" as this report lets on.

    If she bought into GM bonds when she thought the proposition was low-risk, that doesn't answer the question of why she didn't she sell her bonds when it became obvious the company was becoming unstable.

    Nevertheless, I feel for her, as I lost a smaller bit of money investing in GM, too, but I have the objectivity to realize that I assume that my bad investments are my own fault, and certainly not the fault of the sitting president. In fact, if it wasn't for the Obama administration's assistance, GM would have gone bankrupt and lost this woman's money a little sooner!

    June 1, 2009 at 12:31 pm |
  63. John

    Luke, you are quite a genius too. Bonds carry risks just like stocks. If a company goes bankrupt and is unable to repay the bond holders, then that is the risk that goes with a higher yield – you can *lose* money, a lot of money. If you want "riskless" return on your money, then buy US Treasuries (presumably).

    June 1, 2009 at 12:31 pm |
  64. Deb

    GM and the other auto companies knew 20 to 30 years ago that they should be making better and more efficient vehicles. However, they were greedy and focused on gas guzzlers that they made more money off of.
    They took a chance and ignored the future of energy such as oil

    June 1, 2009 at 12:30 pm |
  65. Art

    So, I guess this is a result of Obama change? Now a school teacher has been a participant in carnal behavior without having left schoolhouse...and the president was not even in the same room! "...I did not have sex with that woman!...." What a pick for President!

    June 1, 2009 at 12:30 pm |
  66. Ian

    Bonds are not speculative, they legally have a first call on all assets. That's why they have lower returns than the more speculative stocks. Certainly they come before the unions.

    The government has created a seriously flawed precedent here for anyone looking to invest in ( the safety ) of US denominated bonds in the future.

    June 1, 2009 at 12:30 pm |
  67. Pix

    Doh!

    June 1, 2009 at 12:30 pm |
  68. RobertF

    In reading the previous comments on this article, I find it amazing how many folks don't know the difference between investing in common stock and investing in bonds.

    June 1, 2009 at 12:30 pm |
  69. Michael Ford, CPA

    What is the comment with regard to being a "common person" and not "a corporation"? You are a teacher for Christ's sake, a person with a so-called education. What makes you believe that corporations always have money? Why do you think corporations have lay-offs and go out of business? IT'S BECAUSE THEY ARE BROKE YOU MORON!

    All Americans have learned the lyrics to the song too well...

    "poor, poor pitiful me. poor, poor pitiful me."

    June 1, 2009 at 12:30 pm |
  70. Herman Hudson

    Watch this those that lose their money will blame this president even knowing this economic was already in the tank when he took office.

    June 1, 2009 at 12:29 pm |
  71. Jonathan

    Don't put all your eggs in one basket. She has no right to complain... that is what investment risk is all about. If she didn't want to lose all of her money at once she should have spread her investments around. She deserves what she got for not understanding all of the risks involved. Narrow investing is like buying really expensive lottery tickets.

    June 1, 2009 at 12:29 pm |
  72. AutoBusiness

    I agree that she shouldn't have put all her money in one place.

    But what about the intervening 7 years???? GM has been in decline; and (I pesume) these bonds are traded - she should have had plenty of opportunity to sell them before GM hit bottom. that would have mitigated the damage.

    And yes, being a school teacher is irrelevant

    My 401k has gone down a LOT more than $70,000 - but I understood it was a risk, and bonds are a risk too.

    If this were a local company she loaned money too and it went bust; she'd get nothing at all. ZERO. Because it's GM, and because the government has taken an interest, she's at least getting some stock. Maybe it's worthless. or next-to-worthless. Maybe it'll be worth something someday. But she's certainly no worse off than if she'd invested in a local company.

    Join the crowd at having lost money. Bonds are not as speculative as stocks (normally), but they are NOT guaranteed. The advantage is the interest rate may be locked in and you know how much interest you should make–assuming the company can pay.

    If you thought you were guaranteed a return of your principal you were wrong. That's the sad-but-true reality of it all.

    June 1, 2009 at 12:29 pm |
  73. Roger Arcand

    Bottom Line is if you own Bonds you are to be the first to be paid off in the event the company goes belly up . That is the rule first to be paid out period . That right was taken away by the US government.

    This puts the wohole Bond market at risk for Corperations , Municiple bond market ....etc

    I hope a Bankruptcy Judge straps a pair on and recognizes the rights of bondholders everywhere as this will undoubtly set a dangerous presidence.

    GE bonds ....worthless ! Would the US government do this to Buffet ?

    Can't believe this is happening in the US , maybe Venesuela perhaps. bondholders everywhere prepare to bend over !

    June 1, 2009 at 12:29 pm |
  74. Nick

    Pretty shocking how few people on this page understand the difference between Bonds and Stocks.

    i understand why one might be ignorant of how bankruptcy has traditionally worked out. But the short and skinny is, the President's team has recently decided that the old rules are one of those things they want to put their "change" stamp on.

    Hopefully, enough people will file court cases after the fact to force this case to the supreme court on a "separation of powers" brief. Since it's been pretty clear that the president's task force has unlawfully influenced the Judicial branch in this activity (specifically forcing a judge to hurry up and release his opinion in the case of Chry. corp )

    Yes, she could have diversified more. However, the President still changed the rules of the game , still rewarded his primary campaign contributers (unions) from those regions, and in many respects crossed several important boundaries that were designed to prevent corruption and unbounded power.

    The best place for this argument to occur is in the courts.

    June 1, 2009 at 12:28 pm |
  75. Steve

    Everyone is going to feel the pain in all of these situations. The market is the market. If you don't or cannot afford to lose it, don't invest it. That rule has never changed.

    June 1, 2009 at 12:28 pm |
  76. Tracy Walton

    While I sympathize with the bondholders, we need to remind them that it was their collective greed that forced this situation. The majority of the financial issues that GM tried to resolve was rejected by the bondholders because they were too greedy to accept a settlement which forced this circumstance. And then they want to whine about their losses??? They gambled, thinking that GM was willing to continue negotiations and lost. It's time to get over it and shut up.

    June 1, 2009 at 12:28 pm |
  77. Dan

    Wow.... I cannot believe the crass, self-righteous tone of almost everyone commenting on this story. You should be ashamed of yourselves for being so vicious with someone who lost years of their labor. Also, I would caution anyone that is not viewing the aggressive policies currently underway without skepticism.

    June 1, 2009 at 12:28 pm |
  78. Tom

    The blame should be with GM. And without government's plan, I doubt Debra would have gotten much more given the huge negative net worth of GM today. Had Obama's plan provided for more money for people like Debra, someone else would had to be screwed–the basis principle of hard budget constraints.

    Who are we to say that Debra should be on top of the list? And the list is very long–we are already seeing dealers, workers, GM retirees, etc. weaping on TV screens on a daily basis.

    Re mentioning Obama's children : it almost seems like if Debra were teaching Michelle's children, the kids would be hostages of June's personal situation. Or did I misunderstood the logic?

    June 1, 2009 at 12:27 pm |
  79. Richard

    The point people are missing is that the Government is basically changing a law that has stripped this woman of her right (as given by existing bankruptcy laws) to at least have a chance to reclaim her money. Now she's powerless.

    June 1, 2009 at 12:27 pm |
  80. Frank

    This also shows that we need to invest more money in educating teachers.

    June 1, 2009 at 12:27 pm |
  81. wood in virginia

    Lesson to be learned for all other Investors. DON't BELIEVE the HYPE your BROKER tells YOU.

    Even CORPORATE BONDS are SUSPECT ! ... June even if you had a Professional Managing your $ you still would have lost 40-50% of your money.

    Wonder if an Americans left to loan the new GM company $. If they did this to June what will they do to the US Govt. Screw them when they go on vacation..

    We should make Wagoner give back ALL the bonuses he ever earned with this company since 1999. This just didn't happen overnight June.

    June 1, 2009 at 12:27 pm |
  82. Neen

    It is so apparent how stupid the general public is, they have no understanding of investments, they have no understanding of when an investor is ripped off, and only focus their small minds on little issues, like a comment about Michelle Obama. The big picture is this woman had an investment and that investment was arbitrarily crammed down by the administration decision makers. It is only the first step towards a socialist economy, and the government's small but steady steps to take over private enterprise. What's frightening is, there are so many that follow this ideology because they do not know what it is to work hard, save money, make investments to live the American Dream. They just want to have the government take care of their lazy asses until they go to their grave.

    June 1, 2009 at 12:27 pm |
  83. Rick O.

    My heart goes out to all that lost but especially those that are the LITTLE PEOPLE! When obama ran off wagoner you should have known something was up! Wagoner did not want to do the chaper 7 or 13 (which ever they are going). Why do you think he was run off?
    What about the tax payer...30 billion is what we've given them...good job obama! Also GM has 3 massive plants over seas. HOW MUCH OF OUR TAX DOLLARS HAS GONE THERE? Our plants close but you don't hear anything about over seas!
    Hmmmm...coincidence or what? More to come friends, just wait!

    June 1, 2009 at 12:26 pm |
  84. The Truth

    She did not purchase stock, she bought bonds. This was supposed to be a low risk investment, almost as safe as a bank account. If the bankruptcy was allowed to take place properly she would have lost nothing. What happened is the government got involved and threw out the law. Bond holders are to be paid first, instead those that were supposed to be paid last are now in front of the line.

    All those here saying she took risk and now has to deal with it are idiots. She took no risk, the government broke the law and basically gave her money to others. I hope everyone that is bashing her for taking risk have their bank accounts taken away and the FDIC refuse to reimburse them and instead give it to others, that is what has happened here and I hope it happens to those who are bashing her.

    June 1, 2009 at 12:26 pm |
  85. Eric T

    Someone who has burned buying a 2000 Montana Van and 1990 Caprice Classic from GM I have no sympathy for this woman. Investing $70,000 of bonds into GM over the past 5 years is the height of stupidedly. It was clear GM's marketshare was dropping like a stone (and losses mounting) even with them dumping their junk over the past few years. The US and Canadian governments should not be throwing good money after bad trying to salvage this "sinkhole" of a company.

    June 1, 2009 at 12:26 pm |
  86. K

    There are a lot of people lost money in the stock market too and the gov't is not going to give them back the money. If the gov't is doing something or her, then the gov't should doing something for other people too. Also, why did she even listen to the promise that politicans make???

    June 1, 2009 at 12:25 pm |
  87. ken

    'mary Bryant June 1st, 2009 10:58 am ET
    Stop complaining. The Stock Market is a dangerous place. You are gambling. Its a risk that you took. Nobody made you invest in GM. So what that you teach school. Its not relavant. You invested and it did not pay off.'
    Excuse me mary 'Nobody made you invest in GM' Who do you think took over GM. I was made to!

    June 1, 2009 at 12:25 pm |
  88. Jeff H

    I feel bad that she didn't do her dilligence or get some outside advice before investing her 70K. Come on!...Investing 70K with a destroyer of capital like GM? Especially with all of the information out there about this organization. GM is a classic example of management lack of intestinal fortitude to deal with reality. My aunt is 91, never had education past high school and would never throw her money into a black hole like that. And since when are the Obamas underwriting your investments? Again – I wouldn't wish this on anyone, but you've got to THINK.

    June 1, 2009 at 12:25 pm |
  89. Julie

    I don't think it's GM's fault she put that much money in this. Investing in compmanies is a gamble...she lost. Sucks...but that's life.

    June 1, 2009 at 12:25 pm |
  90. Craig

    If you put a big chunk of your savings into a single company, then you deserve to lose all of it.

    June 1, 2009 at 12:24 pm |
  91. Eric

    IDIOT.........HA. GM STARTED LOOSING MONEY ALONG TIME AGO. NEXT TIME STUDY UP TEACH....AND BOY THEY SURE SAW YOU COMING.....IDIOT....

    June 1, 2009 at 12:24 pm |
  92. Bob

    I agree that the lady should have understood the risk and gotten out long ago, as it has been apparent for at least a couple of years now that GM was eventually toast. However, she is completely correct that the Obama administration in their socialization of GM and Chrysler has assisted in robbing bondholders blind. In the eyes of Obama, anybody who actually possesses an investment such as corporate bonds is obviously among the "wealthy elite" and therefore not worthy of any consideration. And nobody with half a brain will ever extend a penny of credit to either of these companies again. But it's a moot point, because Obama and company are just going to take our tax money and give it to them to keep two dead business and the UAW afloat.

    And Vonnie, the reference to Michelle Obama's statement was not only appropriate but brilliant. And the word "AS" was never part of the original statement – go back and listen to the tape. The only "hating" going on here is on the part of the Obamas and their party who hate anybody that doesn't buy into their socialist vision for America.

    June 1, 2009 at 12:24 pm |
  93. Jeff

    I'm surprised and encouraged by the responses to this video. The general consensus is usually to pity the individual, vilify the corporation and the stock market, and expect the government to take care of things. It's nice to see people expecting a little responsibility and accountability from the every day American and blaming the government for throwing away billions of dollars on failed companies. I think you people may finally be waking up!

    June 1, 2009 at 12:24 pm |
  94. Mike in Manassas

    Sure, this lady didn't diversify. She put all her eggs in one basket and took on the risk voluntarily. Hey, I put some money in GM stock in 2003 and got the hell out in 2005 after losing 30%. You didn't see me crying on TV about it. So I don't sympathize with her loss.

    However, where I do sympathize with her is the fact that Obama arbitrarily voided contract law in order to steal from bondholders and give some of the loot to the UAW. This is a very dangerous slippery slope to go down, and if we the people don't stop our government from going that way, America is toast. Free enterprise cannot function without the rule of contract law.

    I used to think anybody could do a better job than George W. Bush, but Obama is worse in every way, except for the rhetoric.

    June 1, 2009 at 12:24 pm |
  95. Andre

    I was both unfortunate and fortunate that in 1986 I bought my first car a new (my only new car) a Pontiac Acadian (Chevette). I owned it for 5 years put (120 KM or 75K miles it), buy that time it had been reasonably reliable but was getting long in the tooth. I then moved onto my first Japanese car a Dodge Colt (Mitsubushie) then Toyota Tercel and now am on my 4th Honda a Accord. The Honda's in particular have been great cars, very reliable and economical. Never again will I buy a GM unfortunately, sorry to see the workers lose there jobs.

    June 1, 2009 at 12:23 pm |
  96. RuchJ

    Bondholders do not have any "guarantee" rights to get their money back. Do banks have a "guarantee" to get their money back when they loan you money? NO – there's something called BANKRUPTCY.

    The reason for the bankruptcy is becauses THERE IS NO MONEY TO PAY BONDHOLDERS BACK. What would you have the government do? Pay back all of the bondholders with taxpayer money? It suddenly feels different when you realize that someone has to come up with the money to pay off the bondholders, right? The government deserves to have the majority ownership for "loaning" GM billions of dollars. The goverment is the biggest "bondholder" of all – and they are also only getting shares of GM stock

    ALL OF GM'S EXISTING STOCKHOLDERS WILL BE WIPED OUT COMPLETELY. So this woman is in better shape that the stockholders.

    June 1, 2009 at 12:23 pm |
  97. Matt

    June, you are part of the new deal, you are misinformed, all bondholders are part of it.

    June 1, 2009 at 12:23 pm |
  98. chris

    Don't any of you know the difference between investing in BONDS versus investing in STOCK? You are all railing on her and telling her how risky the stock market is. She is a bondholder, not a stockholder – BIG DIFFERENCE! She has a right to be angry and I hope the bankruptcy judge that gets this case reverses the ruling. Obama and his advisors are a complete joke. They are ruining this economy.

    June 1, 2009 at 12:23 pm |
  99. Tyler

    "Wow- to the people who say- “she knew the risks of speculating”; “the Stock Market is a dangerous place”. HELLO!!!!!!! These are people who invested in BONDS; FIXED INCOME; LOW RISK INVESETMENTS: – NOT THE VOLITLE RISK TAKING STOCK MARKET!!"

    BOND_LameBond, if you actually believe that bonds are non-volatile and low risk when a company is losing market share and bleeding money for years then you're as ignorant as anyone else who feels sorry for her. I'm not up on GM's bond rating over the last few years, but it wouldn't surprise me if it was good simply because the economy was doing well and they'd been around forever. Doesn't change the fact that the company hasn't been strong in a long time, so I don't feel sorry for anyone who didn't have the good sense to do the research themselves and come to an informed investment decision. Maybe she got taken by someone who told her it was a safe investment, but it was still her laziness and ignorance that let it happen to her. Everyone feels entitled to easy money with no risk in the securities markets, but if you really want to protect yourself, you minimize your risk by at least doing your own research before hand. Don't count on other people to decide what to do with your money.

    June 1, 2009 at 12:23 pm |
  100. Manish

    It hurts when your investment bet goes wrong. It hurts more when your taxes goes to save unions and investment goes under!! Welcome to the world of democrats with Big Union Leader President Obama!! We all voted him in(for the record, I didn't). Worst is we will repeat same mistake in 4 years!! just like we did with president bush!!

    June 1, 2009 at 12:23 pm |
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