March 30th, 2009
11:35 AM ET
14 years ago

Obama extends short federal lifeline to GM, Chrysler

[cnn-photo-caption image= caption="President Obama announced his plans for troubled U.S. automakers on Monday."]WASHINGTON (CNN) - President Barack Obama announced Monday that struggling automotive giants General Motors and Chrylser will be given a "limited" period of time to "restructure in a way that would justify an investment of additional taxpayer dollars."

The federal government will give GM "adequate working capital" over the next 60 days to work in conjunction with the administration in developing a better recovery plan, he said.

Chrysler will be given "adequate capital" to continue operations for 30 days while completing a merger with automaker Fiat. The president said that if Chrylser can come up with a "sound agreement that protects American taxpayers, we will consider lending up to $6 billion to help their plan succeed."

Related: Polls: Americans don't like auto bailouts

Obama also indicated that both GM and Chrylser might need to file for bankruptcy in the process of successfully restructuring, which will involve working with "creditors, unions and other stakeholders."

"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," Obama said in remarks delivered at the White House.

Filed under: President Obama
soundoff (80 Responses)
  1. Pepou

    I TOTALLY approve of this. It is time these incompetent CEOs work for their money.

    March 30, 2009 11:37 am at 11:37 am |
  2. Typical White Person

    NOW you are considering bankruptcy??? After we've given them BILLIONS and all you liberals predicted the end of the world if bankruptcy were on the table?

    Un – be – lievable...

    Is this how the spending package marketed as "stimulus" will play out as well? You guys finally admit that it was a bad idea and allowing the market to correct itself works?

    March 30, 2009 11:39 am at 11:39 am |
  3. Mississippi Mike

    Since when is it a politician's job to fire the CEO of a privately held company, give them billions of taxpayer dollars and then create a federal auto warranty program (oh, yes he did)? Load of bullcrap, Obama and the Democrats are betting that fewer Americans will pay taxes than those who do in 2012. They better be right or else they don't stand a chance of retaining power.

    March 30, 2009 11:40 am at 11:40 am |
  4. cj

    Here we go, this is why they should have filed chapter 11. Now the government is telling them who to hire and who to fire and that they should merge. The bailout was just a way for our government to become intrusive in business. They are coming for your civil liberties next, mark my word. Stop the madness!!!!!! I'm sure this won't make the post too Libertarian for CNN

    March 30, 2009 11:41 am at 11:41 am |
  5. Moving Forward!

    The auto unions and corporate executives have run Detriot and other auto manufacturing towns into the grown, about time a President told them to pull up their "BIG BOY PANTIES" and get with the 21st century way of doing business. I'm just sorry that the auto workers will have some rough seas ahead, that are not of their making.

    March 30, 2009 11:43 am at 11:43 am |
  6. oh my....

    This is a bad road we are travelling down simply to give companies a loan. The white house dictates who is employed and who isn't? One day a company like GM is going to refuse to adhere to government demands and just lay off 75,000 workers, then where will the outrage be directed? What ever happened to the American dream?

    March 30, 2009 11:46 am at 11:46 am |
  7. Smitty

    I'm glad to see that we the government is sticking to it's guns on the big 3. They need to stick to those same guns when it comes to AIG and any other financial companies.
    This is all part of the plan....and we are working that plan. President Obama has done alot in less than 100 days and I'm glad to see that he is sticking with alot of what he said during the runnning. Realizing that things change I expect things to start getting better in a matter of years not months....people need to trealize that. it took us 8 years to get's going to take us a few years to get out.

    March 30, 2009 11:46 am at 11:46 am |
  8. Sheldon Winston

    As a small business owner, I can sympathize with GM and Chrysler. However, this is business and must be treated as such. President Obama is doing the right thing by sending a clear message that is time for the auto industry to make the hard decisions.

    March 30, 2009 11:47 am at 11:47 am |
  9. Annie

    Good – now when is he going to rein in Wall Street?

    March 30, 2009 11:47 am at 11:47 am |
  10. AndyL

    Firing the CEO of a privately run company, force the merger of another one. Here I was afraid Obama was too much of a socialist. I was wrong he is a ego-maniac and facist pure and simple. The government should have no say on how and who runs private corporations. Hope people will wake up and realize what he is doing.

    March 30, 2009 11:48 am at 11:48 am |
  11. Jack

    Go Obama, do what is right, not what is popular!!

    March 30, 2009 11:50 am at 11:50 am |
  12. Richard K - Powell, OH

    Lets see - To get bail out money the auto workers have to give up all sorts of fringe benefits and pay and the GM CEO has to resign. At the banks to get bail out money the CEO's don't have to resign!!! and the workers don't have to give up any pay and fringe benefits!!! in fact they contnue to get bonuses. WHAT A CROC!

    Throw out the CEO's that got us into trouble with risky investing and replace them with real leaders from the 90% of small banks in this country that are not in trouble.

    It's time we start having peaceful demonstrations in the streets showing the rotten leadership that we the people from whom they derive there power have had enough.

    March 30, 2009 11:50 am at 11:50 am |
  13. Mike Syracuse, NY

    Let them go bankrupt. It's the only way to break the grossly uncompetitive union contracts. True that executive compensation is obscene and needs fixing, but it only affects a small number of people. Union contracts affect tens of thousands, and are a major reason US car makers aren't competitive with the rest of the world. If union workers don't want to work for reasonable salaries and benefits, there are millions of unemployed Americans who will.

    March 30, 2009 11:51 am at 11:51 am |
  14. Karen

    March 30th, 2009 11:48 am ET

    Firing the CEO of a privately run company, force the merger of another one. Here I was afraid Obama was too much of a socialist. I was wrong he is a ego-maniac and facist pure and simple. The government should have no say on how and who runs private corporations. Hope people will wake up and realize what he is doing.
    Ya ya ya, but they want our tax dollars.

    Bottom line is we are all interconnected. If he knows what he is doing I say, Go for it!

    March 30, 2009 11:51 am at 11:51 am |
  15. republicans hate america

    I love it CEO's everywhere be on notice you will not run this country as long as we have Obama in the WH there is a god after all.

    March 30, 2009 11:53 am at 11:53 am |
  16. oh my....

    @ Sheldon

    I hope you feel the same way when it is turn for your company to be directed and controlled by the government.

    March 30, 2009 11:54 am at 11:54 am |
  17. barking dog from Delaware

    If he screws the auto workers I will never buy American again.I will buy a chinese car,not a scab car made in a southern state.

    March 30, 2009 11:54 am at 11:54 am |
  18. gail

    What I know about Mr. obama is that he doesn't take decisions like this lightly. So, I say, he must have consulted many people before the CEO was let Go. I am really comfortable with that decision. Actually I always thought when am I going to see some backbone in him and now I consider him a President. That must be hard. Now let get these co. going!!

    March 30, 2009 11:54 am at 11:54 am |
  19. RickB_Georgia

    Should have been handled via Chapter to start with. If the government is going to start dictating who to hire and fire they should start with Congress. Term limits – 12 years!!!

    March 30, 2009 11:54 am at 11:54 am |
  20. Dutch/Bad Newz, VA

    They need to merge with other companies. We can't keep giving them money. The problem is that people aren't buying American gas guzzling cars anymore.

    March 30, 2009 11:55 am at 11:55 am |
  21. Carl

    With all due respect to the President, but the American people will take your firing of GM CEO a little more seriously if you

    A) forced the resignation of Dodd, Frank, Geithner, Maxine Watters, and a few others, including Ds and Rs, that got us in this mess

    B) forced the resignation of any…. ANY board member on ANY financial company.

    This is just a show at this point. It shows me who really runs the country.

    Anyone saying it's ok for the President to force a CEO to resign to begin with is downright loony. This is for the shareholders to decide, like what they are doing at Bank of America.

    March 30, 2009 11:56 am at 11:56 am |
  22. 35% of Americans are TRAITORS for wanting America to FAIL and 65% of Americans to SUFFER!

    I agree with President Obama about giving GM another 60 days to work with a new CEO. Apparantly Waggoner did not push the union or the bondholders hard enough for concessions, maybe just assuming the President Obama would just keep giving taxpayer funds. Hopefully, the new director can get more concessions so GM can avoid bankruptcy.

    While I understand the need to back the warranty of GM and Chrysler or they would not sell 100 cars in the next 2 months, but Mark Sandi from Moody's said the tax payer would be on the hook for up to 100 billion if GM went into a structured bankruptcy as opposed to liquidation.

    President Obama stated it would be a bankruptcy filing and not a liquidation, yet I did not hear how Sandi's numbers would change or would pay for the expenses during the time frame it takes GM to reorgainize.

    Hopefully, that will be addressed before GM is acutally allowed to go into bankruptcy as opposed to liquidation.

    March 30, 2009 11:56 am at 11:56 am |
  23. Georgia Gal

    Obama REQUESTED that Rick Wagoner resign. He did not tell him to. Rick Wagoner did not have to resign. He could have stayed on if he wanted to. And besides anybody thinking that if he had not resigned it would have been better for GM and for the country is very much mistaken. I recall a lot of Republicans last year when Bush was still in office crying for him (Wagoner) to step down and now that he has resigned Republicans are crying because he simply agreed to what Obama asked. Rick Wagoner is a big boy and if he wanted to stay head of GM he could have (at least until the Board decided they had enough and fired him). If there is any hope of GM surviving this then Rick Wagoner was going to have to go down one way or another.

    March 30, 2009 11:58 am at 11:58 am |
  24. Dan, TX

    Doom and gloom. Panic. Drink. Repeat.

    March 30, 2009 11:58 am at 11:58 am |
  25. Emily

    I think some Americans are suffering from what they were used to. They can not stand the Realigment of this country. Too bad!

    March 30, 2009 12:00 pm at 12:00 pm |
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