Today's Outrage: Who Wants A GM Bankruptcy?

It seems like the media are keen to see General Motors (GM Quote) wind up in bankruptcy.

Everywhere you look there's a story saying bankruptcy is likely for GM.

The Washington Post(WPO Quote) has one, so do ABC(DIS Quote), Reuters(TRI Quote) and the Associated Press.

It's a much more interesting story than the slow pace of restructuring talks outside of the courts.

Or maybe it's the Obama administration that's planting the bankruptcy talk in the media to prepare all the company's executives, union leaders, employees, bondholders, shareholders and suppliers for the inevitable.

But is it inevitable? Is bankruptcy a necessary condition to receive tens of billions more in taxpayer aid? I always thought the idea behind a federal bailout was to avoid bankruptcy.

That's how it worked for AIG (AIG Quote), Citigroup (C Quote), Bank of America (BAC Quote), etc, etc, etc. Why are the carmakers any different than the banks and insurers that are getting government handouts without going to court?

Looking beyond the bankruptcy headlines, we've seen signs of progress in restructuring talks at GM. Just yesterday the reports said the United Auto Workers reached a tentative agreement to allow more factories to be closed, trim labor costs and reduce retirement benefits.

So now the bondholders appear to be the only holdouts. They seem none to pleased about the plan to convert their bonds into shares and give up their protected creditor status and interest payments. I don't blame them.