Obama tells Chrysler and General Motors that their plans are not good enough:
WASHINGTON — President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.
The government sought the departure of GM chief Rick Wagoner and said the company needed to be widely restructured if it had any hope of survival. It said it would provide the company with 60 days operating capital to give it time to undertake reforms.
The government will grant Chrysler 30 days operating funds, but said it must merge with another carmaker in order to remain viable. Talks with Italian carmaker Fiat are underway.
The president addressed the nation at 11am, explaining that GM and Chrysler have to come up with better plans or they will be forced into an orderly bankruptcy. He’s basically holding a gun to the heads of the creditors and unions, letting them know that they need to make more concessions. He’s also telling Chrysler that they have to partner up with Fiat in the next thirty days. You can read Obama’s full statement here.
And the banks are …uummm..viable ?
sherffius© had a great cartoon about “Doubtroit” a while back:
wonder if they’ll force a chapter 7 liquidation on them, or chapter 11 reorganization. imo, 11 is probably more likely. expect the unions to take it in the shorts … again.
going, going, gone…
I fully expect calls from the Right for Obama to “save” GM and Chrysler by disbanding the UAW. They’re already calling him a fascist for this, forgetting Bush fired Fannie and Freddie’s executives.
Obama can’t win. He does nothing, “he let the automakers collapse on his watch”. He does something, “he violated the free markets in an unprecedented way.”
Remember, Bush punted to Obama on this mess six months ago.
that wouldn’t surprise me a bit, and enough blue dogs and their cohorts inthe senate will probably go along with it.
the only winners here are the robber barons who continue to walk away the the disasters they created w/ millions in their pockets.
abc’s reporting wagoner is driving off with a $20m “retirement package”:
it’s a win-win for him; he walks with a nice chunk of change and doesn’t have to f*ck with the problem anymore.
what a deal.
expect the unions to take it in the shorts … again.
I think you mean expect the taxpayers to take it in the shorts again.
Because the major “problem” left between the unions and GM are the so-called “legacy” costs. The unions have been good-faith negotiators, and have given up a lot, but the pensions and health care of their retirees is eating up the business and is not really negotiable. About the only thing the UAW has left to “give up” are the retirees.
And if the retirees’ pensions and health care are dumped, who picks up the tab? One way or another, we do.
The other side of the bankruptcy will hit the car dealer sweetheart contracts that they’ve been unwilling to renegotiate and bondholders who have been thinking that if they hold out long enough the government won’t force a bankruptcy. Those groups I’m not going to cry too hard over – if they’re willing to sit down at the table with GM in the next two months they can maybe negotiate something and keep some portion of their money intact. But right now they’re all gambling that GM is “too big to fail” and won’t negotiate. Unpatriotic bastards – I hope they lose their shirts one way or the other.
Please understand I have “issues” with the management of our Big Three, and am not defending what I view as their sustained focus on short term results over longer term sustainability that was part of the reason they are now in the mess they are in; but I must take issue with Obama here. If they haven’t taken steps to insure their viability, tell me please, who in the last six months has? Toyota? Honda? VW? All of these manufacturers are feeling the pinch big time.
Lack of credit available to qualified buyers is part of the Auto Co’s problem. The ever shrinking middle class is part of the problem. High unemployment is part of the problem. Folks who were lured into buying what they could not afford by predatory lending practices is part of the problem. Uneven trade agreements with other manufacturing countries is part of the problem. Lack of a rational energy policy in this country (for decades) is part of the problem. The notion that forcing one or two of the Big Three into bankruptcy will not have a ripple effect through the entire industry is part of the problem. Conveniently laying the blame for all of this at the feet of the now ex Chairman of the Board of GM is also part of the problem, in my view.
I hope to hell Obama knows what he is doing. From this seat it appears as though our entire manufacturing base is on the verge of collapse. If that happens, I’m terribly afraid that no matter how much new money is thrown on the fire, it won’t be enough to put it out.
The threat of bankruptcy is required to focus the minds of dealers, bondholders, the supply-chain, and, yes, unions.
Without the threat, the deal would not improve from what was found wanting today.
If they can’t get their shit together in 60 days to avert bankruptcy, what else can we do?
What else can we do? Expect a very rough ride.
Deal reached:
President Obama, in announcing his auto bailout plan today, gave Chrysler 30 days to finalize a deal with the Italian automaker as a prerequisite for receiving any federal funds.
Chrysler, in its statement, says that by providing the U.S. car company with product and platforms, technology cooperation and global distribution, Fiat “strengthens Chrysler’s ability to create and preserve U.S. jobs; gives U.S. consumers more choices for environmentally advanced vehicles; gives its dealers more of the products they need to be successful; helps stabilize the supplier base; and allows Chrysler to pay back government loans sooner.”
this didn’t take long: the new mgmt team’s already in place at GM:
former COO frederick “fritz” henderson moves into the CEO slot; and a very interesting choice for chairman of the board at GM, kent kresa, former chairman and CEO of defense contractor Northrop Grumman Corp, with some very close ties to the carlyle group…strange bedfellows, indeed.
for bankrutpcy. Is the government going to provide the DIP financing?
So a forced bankruptcy will revert to virtual liquidation. Who will own the assets?
Will the government step in, pick up the assets and convert the remaining plants to production for mass transit?
BREAKING: Obama gives 60 days to Citigroup and AIG to get their act together.. go back to the blackboard.
Not…. and that’s the problem here.
yes, the gov’t has forked over Billions to GM and Chrysler.. but we’re giving TRILLIONS to the banksters, AIG, etc.
WHY NO CONDITIONS FOR THEM from the Obama administration? why no financial masters of the universe fired?
“AIG: a bottomless pit masquerading as an insurance company”. The Economist.