Automaker loan puts healthcare at risk

DETROIT, Dec. 26 (UPI) -- A loan stipulation calling for U.S. automakers to pay half of retiree healthcare costs with company stock carries high risks, a labor expert said.

The federal bridge loan arranged last week for General Motors Corp. and Chrysler LLC includes the stipulation that $10.5 billion of the contribution owed to a union healthcare trust be paid with company stock, the Detroit Free Press reported Friday.

But, with the automakers' stock values falling dramatically and bankruptcy looming as a possibility for GM and Chrysler, University of California Professor Harley Shaiken was reminded of the collapse of Enron, where the company used stock to contribute to employees' 401(k) retirement accounts.

"It's as if we, as a nation, learned nothing from Enron," he said. "The great Enron lesson was: Don't put all your eggs in one basket."

"Putting half your eggs in the trust-fund basket is still a high level of risk," he said.

The healthcare trust set up by automakers and the United Auto Workers union is meant to cover about 750,000 retirees, the newspaper said.