Although the automakers can deviate from these targets, "absent a near-term economic recovery," Citigroup auto analyst Itay Michaeli wrote in a note to investors this week, "we believe it would be difficult to deviate significantly from these targets and still demonstrate viability."

Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass., said that although the changes to VEBA funding are not optimal for the approximately 750,000 people for whom the new fund was supposed to provide health coverage beginning in 2010, it still might ensure more benefits than they otherwise would have received in retirement.

"I think this makes the best of a bad situation," Chaison said. "If they pay a portion of the VEBA now, they might have enough to pay for the health-care benefits of the current retirees, and they might get more later."

At the time the UAW agreed to it, workers and analysts believed a VEBA would protect them from the risk of bankruptcy. Although an automaker default seemed possible, just a year ago, few thought it would happen before the VEBA was funded and took effect in 2010.

But with the risk of illiquidity now an imminent possibility, the UAW on Dec. 3 agreed to postpone until 2012 the VEBA payments that were due from GM and Chrysler in 2010.

Now the government is asking the trust to accept half cash and half stock.

A UAW spokesman declined to comment on the proposed conditions for changing VEBA funding.

GM retiree Ralph Herndon said he isn't worried about getting half of the VEBA funding from GM stock - he has faith the company will rebound and survive - but he is worried about the management of stocks on Wall Street in general.

"GM stock doesn't bother me," Herndon said. "I'm not going to worry about the VEBA because all the worrying we do is going to change nothing. I'm cautiously optimistic it will work out. ... But if you expect me to save for my own retirement, someone needs to manage the managers on Wall Street better."

Originally published by McClatchy Newspapers.

(c) 2009 Columbia Daily Tribune. Provided by ProQuest LLC. All rights Reserved.

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