Today Obama addressed the restructuring efforts of General Motors and Chrysler.
…after careful analysis, we have determined that neither goes far enough to warrant the substantial new investments that these companies are requesting. And so today, I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success.
While neither auto maker provided restructuring plans that meet Task Force Obama’s standards, it was clear that GM had better positioned itself in recent days with the firing of its CEO Rick Wagoner.
…after broad consultations with a range of industry experts and financial advisors, I’m confident that GM can rise again, provided that it undergoes a fundamental restructuring. As an initial step, GM is announcing today that Rick Wagoner is stepping aside as Chairman and CEO. This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it’s a recognition that it will take a new vision and new direction to create the GM of the future.
In this context, my administration will offer General Motors adequate working capital over the next 60 days. During this time, my team will be working closely with GM to produce a better business plan.
Chrysler, on the other hand, apparently hasn’t demonstrated sufficient sacrifice and has been given a different fiat:
The situation at Chrysler is more challenging. It is with deep reluctance but also a clear-eyed recognition of the facts that we have determined, after a careful review, that Chrysler needs a partner to remain viable. Recently, Chrysler reached out and found what could be a potential partner — the international car company Fiat, where the current management team has executed an impressive turnaround. Fiat is prepared to transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to building new fuel-efficient cars and engines here in America.
At the end of the day, what may be the ultimate fix for GM and Chrysler? Bankruptcy, of course.
While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.
No need to question the government’s commitment to rebuilding America’s automotive industry, Obama announced government warranties for GM and Chrysler.
It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can — if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe.
In fact, it will be safer than it’s ever been. Because starting today, the United States government will stand behind your warrantee.
Government Motors - “Backed by the industry’s best warranty, the U.S. taxpayer.”