Obama extends short federal lifeline to GM, Chrysler
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/POLITICS/03/30/obama.autos/art.obma.gm.chyrs.cnn.jpg 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.
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president obama is finally making tough decisions that bush should have been doing. thank god we now have a president smart enough to jump start us into recovery.
i for one don't want to pay GM'S retirees health benefits that i can't afford for myself. shame on the unions for putting these workers so high on the food chain that now they must fall like the rest of us.
i feel bad for the workers but they have enjoyed high salaries and perks for years so now it is their time to give back like the rest of us have already done.
Just wondering, if GM fails now, do we get to fire Obama or should we still blame Bush?
This is totally UNACCEPTABLE!!!! We are a working family with a dilemna of just having our family all be together for Easter Dinner – AND you are thinking of bailing out useless worthless large corporations while we are wondering how to split the cost of a Holiday Dinner just so we can be together. Everyone in our families have worked for the past 35+++ years and we worry about a Holiday Dinner cost while you are BLOWING our finances away!!!! How can you do this to the people who worked all their lives and now worry about having a meal together while jackoffs want new cars???? Well, I'm not going to put up with this crap any longer. Should we all stop working and get BAILOUTS????? Mr. Obama Stop screwing the REAL people!!!!!!
Did any of you really think that there would be no government strings attached to this money? Time to read 1984, folks.......Big brother is getting bigger under Obama.
Once you allow the government in look out! I'll have a shred of respect for this president when he stops pussyfooting around the auto unions. Their demands are just as responsible as the management. However, it is much more politically convenient to go after the management 'fatcats' than the labor unions who backed you, right, Mr. President?
These companies, which have a long record of mismanagement, high costs and poor products, should be allowed to fail. End of story.
BTW – can the same principle apply to congress? Talk about a group that needs to be fired for incompetence and mishandling of money!
I agree with the President. If the gov't is using our money to bailout these companies then he should have the right to pick and choose which President heads that company. Good job President! I'm behind you on this!
To all of you crying, the CEO was asked to resign,which he did so himself, not forced. Also the merger with Chrysler was in effect since the begining of the year so he's not forcing them to do anything, except what they where already going forward to do. Also the Billions that we gave them originally where loans, which will be paid back. Before all of you from the right start screaming socialism, when the carmakers went to the government for money and where told to have a viable plan by the end of march, they knew what was going to happen if the plan wasn't good enough.
It’s a sad day in America when the president of the United Sates can force the CEO of a public company too resign. This community organizer / social worker president has no experience running a business, making payroll for employees. Now all you can do is wait for the 20+ percent unemployment, 20+ percent interest rates on mortgages, 0 percent on earnings. We have the Democratic Party in Congress driving this nation into bankruptcy.
why delay the inevitable. Let them go bankrupt, renegotiate the contracts.
I do no think government should interfere with how the private companies operate.
Yes, we are in bad economical situation, but we have been in this type of situation before, every person in US who is 40 and over knows that.
I support this administration, but I do not support socialistic government, PERIOD.
I do not want this government when going gets tough like it is right now, to loose the control and become socialistic government.
The GM CEO has to go, but AIG can do whatever they want. GM has only had one SMALL bailout, but AIG has had many LARGE bailouts, and gone on retreats and gotten large bonuss for their executives. Oh, yes, and one of the AIG board of directors is appointed to a tax reform panel. Hmmm.... I would certainly like to see the list of donors and the amounts they made to the democrats campaigns.
The president doesn't have any power over companies. The companies are broke and they have been very poorly managed.
We have two choices, let these companies go bankrupt, and hope the economy is strong enough to absorb the loss of 200,000 more jobs. Or keep them going losing billions every year, subsidized by the government.
In either case, we are going to have to increase tax revenues to pay for it. There is no other choice but to raise taxes on someone to pay for the damage done by the business "leaders" who betrayed capitalism and enriched themselves while raping their shareholders.
Last I heard this is American, and the shareholders decide who is the CEO? I'm sorry, this is America right, we aren't in Venezuela are we?
But even if you do force(aka blackmail GM) into firing Wagoner, why is he the only CEO being forced out, over a relateively meager LOAN of $20-30bill. The CEO of Bank of America is intact, Citi CEO is fine, etc and they have taken TONS more money, with no strings attached.
This is communism and it's bad finance. GM should have filed bankruptcy on it's own and let the chips fall. Like some "czar" in Washington thinks he's going to come to Detroit and be the great savior?!! Please, this is nonsense, socialism and hypocracy rolled into one large Washontonian mess.
Carl,
Obama will not ask Gheitner to resign because he feels he is doing a good job and he has no place in asking either Dodd or Frank to resign. That is the place of the Governor of the states they represent and their constituents.
With regards to Wagoner. He REQUESTED that Wagoner resign. Just requested ... that's all. Wagoner didn't have to. He could have stayed on until the Board decided they had enough and fired him, but by the time that happened it would have probably been too late to save GM. At least by doing this now, there is still a chance to save GM, which if were to fail would be even more disastrous for the economy of the country.
So the Republicans say to save billions of dollars by not bailing out the auto industry, and let the auto industry go through bankruptcy to restructure. And the Republicans are called insensitive and out-of-touch. The Democrats say give the auto industry billions of taxpayer dollars, and after we give them our hard-earned money, THEN they say let them go through bankruptcy. Then the Democrats are praised for being the party of the people. One party was upfront about wanting the auto industry to go bankrupt, and the other withheld this information until after they got our money. Yet the party that was upfront about it was not the one praised.
Don't give the automakers another dime! They've had their chance to improve and provide a plan for restructuring, and haven't done so. They're just giving lip service to the American taxpayer.
However, if we're going to fund the automakers, it's our right (President Obama's right) to call some shots on who's on their management team and how the company(s) are run.
Why is he making the auto industry (getting less than 25 Billion)jump thru hoops but the banking industry ( getting over 200 billion) gets the federal money with no restrictions at all. The CEO of GM resigned but the heads of the banks still have there jobs. There may be more to this but the perception is the banks are getting away with murder.
Here's my plan for GM:
Cut a bunch of your brands. GM is made up of Hummer, Pontiac, Jeep, Saturn, Cadillac, Buick, Oldsmobile (does that one still exist?), Chevy, and GMC (I might have missed some). I say cut Pontiac, Cadillac, Buick, Oldsmobile, Hummer, and GMC. Leave Chevy as the "luxury" brand, a-la Acura or Lexus, and have Saturn compete with Scion for the "youth" market. Rather than cut all those jobs, just cut those cars and produce a more limited line.
Also, GM makes more hybrid cars than anyone else (primarily because they make more cars in general). Why not make the bold step of producing a 100% hybrid-only car company? Clearly, hybrids sell, and that would be a major selling point for GM. I don't want to see them go down, but they're way too big and make way too many cars to survive.
Clearly, bailing out the auto industry is nothing but pandering to the unions by a president who received a lot of cash from them in "campaign contributions".
Let them go to bankruptcy and get the enormous millstone that the unions have forced on them off of their necks.
No, Wagoner was not fired. But he was forced to resign. Nothing short of extortion by the administration. The auto industry is NOT just in Detroit, people..... Toyota, Honda, and others are thriving. Ford did the right thing by not accepting govt money.
When will Obama tell Barney Frank and Chris Dodd to step down. Don't they deserve to lose their positions as well?
No more money to car companies. There is no reason besides their own profits that we aren't driving 100mpg cars. They can make their own money just fine, thanks.
I agree 200% with the comment from Carl.
What exactly is being done with the CEO's of Citi, Bank of America and all the Wall Street fat cats that had a huge part in the decline of the economy? Why is the auto industry being singled out for poor management and the banking industry goes unregulated?
If our government officials are so skilled in stating how and who should run a corporation, why can't the national budget be balanced? When was the last time a Senator/Congressman or any legislature managed a large corporation?
Is this still a Democracy or have we moved to a Socialist state?
Great. Now American auto is owned by foreigners! And to believe some were upset that American beer was bought out. This is horrible. I wish the government would break GM into two plants that are of a manageable size and offer them carrots and sticks to go ALL green. Now, who's going to benefit from the bailout? ... the Italians?
Just for the record, President Obama is not forcing the CEO of GM to resign.
If Mr. Wagoner had a plan to keep his company solvent without government assistance, he has been free to implement it for the past 30 years. When you accept government money it comes with government input. That's called "life".
Its funny....we throw money at them and they complain....we do nothing and the companies fail, taking down more of the economy...the President tries to go down the middle only giving money if there is actual progress..and still they complain.
What do you people want? None of these choices are good. Do nothing and the economy takes a huge hit...you need to put conditions on the money to get the most efficient result. Stop complaining...the Republicans do said that restructuring, especially in regards to management, would be necessary if the government would help. This is what restructuring looks like.....everyone likes to talk the talk, but loves to simply bash the walk that comes with it.
I totally agree with President Obama that GM and Chrysler have not gone far enough with their restructuring plans. The first thing the rich and powerful do is to start picking on the poor guy at the bottom when they should be looking at the people at the top that made the bad decissions and ran the company in the wrong direction in the first place.This time they should start from the top down instead of the bottom up where good hardworking people get hurt so they can keep their perks, planes and golden parachute retirement's. Lets see some real sacrafices from these people not tokens.