Tracinda's Jerry York Says "I Told You So" in More Polite Terms

Tracinda's Jerry York Says "I Told You So" in More Polite Terms

You just know Jerome York is dying to say it: "I told you so."

The former Chrysler executive who served on General Motors' board of directors representing the interests of billionaire Kirk Kerkorian, had insisted the Detroit automaker ditch money-losing Saab and Hummer. But GM executives refused to entertain the notion. They insisted the automaker's many brands were an asset: not, as York contended, a drain on resources.

Now look where GM is -- staying afloat on government loans as it sets Saab loose and has Hummer on the auction block with a plan to eliminate it if no buyer is found.

And York is talking with Reuters. "All of the data I've seen on GM would indicate that at the end of the whole operational restructuring, they would have piled up so much debt. In many respects they would be back where they are today," York told Reuters in an interview late last week and published Tuesday.

York said a traditional bankruptcy is a bad option for GM but making the cuts it needs to would be difficult without filing for bankruptcy. "It is not inconceivable that the federal government could decide to orchestrate a cram-down, quickie bankruptcy filing," York told Reuters.

He added: "I personally believe it would be deplorably bad to have a company the size of GM go through a normal bankruptcy process at this time. With the unemployment rate being so high, the carnage in the financial markets, it's going to make the markets substantially worse."

"There are no great choices here," he said. "There are only bad choices. The question is what is the least bad choice."

York resigned from GM's board after the Detroit automaker ended talks on a proposed alliance with Renault-Nissan, a move spurred by York and Kerkorian.

On other topics, York said Ford is the best positioned of the Detroit automakers. Tracinda was Ford's largest external investor in 2008 but sold off its remaining stake in the auto company before the year ended. "Ford continues to be far and away in the best shape. With a little luck they might scrape through this thing without needing federal money," he said.

York, who played a role in two Tracinda takeover attempts on Chrysler, said a proposed alliance between Chrysler and Italy's Fiat, which would give the Italian automaker a 35 percent stake in Chrysler in exchange for its small car technology and vehicle development programs, would address some of the automaker's weaknesses. "Chrysler is not viable in its current form," he said. "The merger with Fiat looks like a very good solution to me."

Always talkative, York refused to answer any questions from Reuters on Tracinda's failed efforts in the auto industry. And on Tuesday, Moody's rating service named MGM Mirage, controlled by Kerkorian through Tracinda, as one of the companies most likely to default on its loans. MGM Mirage, which owns 10 Las Vegas casinos, was added to the "Bottom Rung" of Moody's list this quarter. It has $8.1 billion in bonds outstanding, with $1.28 billion coming due this year, according to data compiled by Bloomberg News. At the same time, gambling revenue in Las Vegas, the biggest betting center in the U.S., fell the most on record last year, causing declining sales at MGM Mirage.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.