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

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.


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

    I'm sorry that the CEO of GM has lost his position, but the government cannot continue to bailout every enterprise. The President gave him amp time to get it together and it did not happen. If one does not perform well in his/her position or meet company's expectations normally that person will be fired. I do wish him well.

    March 30, 2009 12:27 pm at 12:27 pm |
  2. Mike Syracuse, NY

    Once upon a time America was the land of personal responsibility. If you ran a business proficiently, and made a product the public wanted, your business prospered. If not, you went out of business and you were replaced by a better run company. Think of it as the theory of survival of the fittest. Today we are a nation of bailouts. The weak survive making us less competitive in the long run. Let bad businesses fail. The strong will grow and thrive.

    March 30, 2009 12:28 pm at 12:28 pm |
  3. ADAM W.

    OK, just want to put my two cents out there.

    After reading a few of the comments, and using the CTRL+F fuction on my keyboard to search for FORD, I found none. Why is Ford not asking for Billions and Billions every week, and every month. Watching the news I never hear about how bad or (good?) they are doing. Why are we not finding out what they are doing to stay afloat in this mess we call the auto industry. Its like ford soesn't even exsist!

    Here's my take, L E T T H E M F A I L !
    We, the tax payers can say alot of money, and it will make them work alot harder. Think, when we give them money, they get to sit back and breath a little and figure out what they are going to do, with no positive results. Lets start forcing them to make those hard decisions.

    I say when they are at rock bottom then we bail then out for next to nothing and we the american people get that great BONUS (I guess u would call it) at the end of the road. Why waste a bonus on the EXECS give us one

    March 30, 2009 12:28 pm at 12:28 pm |
  4. Irene

    Obama has opened himself up to criticism of both too much government oversight of private industry by ousting Wagoner and a misstep in rebuffing more efforts to save GM and Chrysler. This is a very bold move.

    March 30, 2009 12:29 pm at 12:29 pm |
  5. AndyL

    I just realized this, according to the graph on CNN business page, GM has lost approx 85 billion in the last 4 years, result, Waggoneer is asked to leave.

    Obama is in office a couple months and he adds TRILLIONS in debt to the country.. Result: people think this clown is doing the right thing.

    I'm amazed.

    March 30, 2009 12:30 pm at 12:30 pm |
  6. the idiot

    Notice the greedy unions did not do a thing to help. Look forward to EFCA Congress will give them shortly so they can put more companies out of business and then whine about republicans. Too bad the NEA can't put our school systems out of business, maybe we could get a better education system.

    March 30, 2009 12:31 pm at 12:31 pm |
  7. william from oregon

    GM is reintroducing the Camero another gas guzzler. Foreign car makers are coming up with new electric cars at a price people can afford. US auto makers need to scrap all the junk now being made and build what we need. GM bowed to the Oil Companys with the EV1 they need to bring it back it worked. The volt does not even come close. Why is this so hard for them to understand?

    March 30, 2009 12:32 pm at 12:32 pm |
  8. Vivienne

    I don't really care how they accomplish getting our US automakers to be competitive and get us into cars that travel at least 60 miles per gallon. I'm tired of being mixed up in Middle East and Arab interests. If we as a country can reduce our dependency on petrolem, we can bring our enemies to their knees without firing a single shot.

    I just want the President to understand that it isn't Okay with me if I look up and see that our Automakers are GONE. That isn't okay with me.

    March 30, 2009 12:33 pm at 12:33 pm |
  9. irritable in ca

    Mister Wagoner is the 4th bailout CEO to be removed (asked to leave –as the case may be) during the recession, the others were all in financial sector. This includes the head of AIG. Lest we forget.

    March 30, 2009 12:34 pm at 12:34 pm |
  10. Charles Atlanta

    Yes. Chapter 11 is the only way to go for GM and Chrysler. All the people know GM need restrucuring in order to survive. Many companies went to chapter 11 and survived. For example, almost all airliners went to chapter 11. Unfortunately, many folks simply did understand the difference between chapter 11 and chapter 7.

    March 30, 2009 12:35 pm at 12:35 pm |
  11. To RUSH and JINDAL: I do not want the levees in Louisiana or Florida to fail, just the policies of the ARMY Corp. of Engineers building them!!!

    Good Job!

    Send the message that if you take a dollar of taxpayer money, the company will answer to tax payer and put the tax payers interest first!

    This should reign in the "corporate welfare" started by Paulson and the shrub.

    March 30, 2009 12:36 pm at 12:36 pm |
  12. Georgia Gal

    Objective Thinking,

    First of all, I think you're confused. You seem to think that it was President Obama that gave these companies this opportunity. It was not President Obama. It was President Bush.

    Secondly, you're misunderstanding the point of all of this. The point is that the survival of these companies is too important to just let them fail without some sort of second chance. They had their second chance and they unfortunately didn't make the cut, so President Obama stepped to the plate and made some tough decisions.

    I don't necessarily agree with all of this, but in order for GM to survive and eventually thrive and grow (which for the best interest of this country is what needs to happen) Wagoner was going to have to go. Nobody forced him to resign. He had a choice. He could have stayed (at least until the Board decided they had enough and fired him), but by then it may (and probably would have been) have been too late to save GM. At least by doing this now, there is still a chance to save GM.

    March 30, 2009 12:38 pm at 12:38 pm |
  13. Arden

    I completely agree with this. Now let's move on to Wall Street and take care of business there.

    March 30, 2009 12:38 pm at 12:38 pm |
  14. Mary, SD

    I can't wait to buy a chinese car.

    March 30, 2009 12:39 pm at 12:39 pm |
  15. Baze

    Wrap it up, these automakers are toast. Fiat is a poor European seller, and at this point there's very little that these automakers can do to reinstitute consumer confidence.

    March 30, 2009 12:43 pm at 12:43 pm |
  16. Thomas

    Vivienne

    "... If we as a country can reduce our dependency on petrolem, we can bring our enemies to their knees without firing a single shot."

    Psst Vivienne, we buy the majority of our oil from our friends (Canada and Mexico). Reducing our dependency on oil will do more economic harm to our allies than our enemies.

    March 30, 2009 12:44 pm at 12:44 pm |
  17. Anna, Missouri

    It would be nice if some people would check some facts before lashing out. It is true that some CEO's have kept their jobs, but not all. Ken Lewis has been CEO of Bank of America since 2001, and Vikram Pandit has been CEO of Citigroup since December of 2007. Pandit is working for $1 this year but took a huge bonus last year. he came from Morgan Stanley, which, I think, was bought by Citigroup.

    Edward Liddy took over AIG in September of 2008 and has a $1 a year salary. I am sure that if he turns things around he will also be getting a huge bonus, but not until 2010. The main point with all the outrage at him is that he really did come in after the fall of the company. He was previously at Allstate.

    Fannie Mae and Freddie Mac were put into conservatorship in September of 2008 and both CEO's and Board of Directors were fired and replace.

    I do agree that it seems like a double standard that the contracts with the banks can't be broken, but the contracts with the unions can be. That is where the outrage should be. But that is just my own humble opinion.

    March 30, 2009 12:45 pm at 12:45 pm |
  18. Seth

    Everyone called the Republicans stupid a few months ago for saying let them go bankrupt. My, how the tables have turned.

    March 30, 2009 12:45 pm at 12:45 pm |
  19. p Coleman

    This all makes me nervous. The government should not be dictating to business in this way, business should step up and do the right thing on their own or go belly up. This is to much power for any administration. This may just trickle down to the states and locals.

    March 30, 2009 12:45 pm at 12:45 pm |
  20. Joe Cool

    Mary, SD

    It would actually be a Japanese car...

    March 30, 2009 12:45 pm at 12:45 pm |
  21. Mari the Independent

    @ Mike in Syracuse............. Excellent comment! Well said, sir!

    After Hank Paulson Bail Out of AIG to the tune of $133 BILLION (Bush sanctioned), it was evident that no one is too big to fail. However, when companies grow this big......... so big, that their failure would disrupt our entire Economy, we have serious problems!

    TO THE FAR-RIGHT: The GM CEO .......RESIGNED......... GET IT???

    RESIGNED! NO ONE FIRED HIM! When a company is failing you do not keep the failing CEO nor CFO!

    The far-right continues to spew its lies! NO ONE WAS FIRED...... THE MAN .................... RESIGNED............!

    March 30, 2009 12:46 pm at 12:46 pm |
  22. Pee Wee

    President Obama is the CEO of the government, a tax-payer funded position. WHen will his salary be cut to $250,000?

    March 30, 2009 12:48 pm at 12:48 pm |
  23. Angela

    I am just happy to know that Republicans are not in control. I believe things would be worst with their love for corporate greed and hate for everyday Americans. Obama and his Adm are doing the very best that they can and it is just better to have the Republicans on the sidelines with their talking points, most Americans are beyond that by now anyway.

    March 30, 2009 12:49 pm at 12:49 pm |
  24. Brian Crooks

    March 30th, 2009 12:35 pm ET

    Yes. Chapter 11 is the only way to go for GM and Chrysler. All the people know GM need restrucuring in order to survive. Many companies went to chapter 11 and survived. For example, almost all airliners went to chapter 11. Unfortunately, many folks simply did understand the difference between chapter 11 and chapter 7.

    Charles Atlanta
    =================================================
    The problem is that no matter what, if an airline goes bankrupt while I'm in mid-flight the plane doesn't drop out of the sky. Nobody is going to want to buy a car from a company going through bankruptcy because where do they go for their service? Is the warranty (a contract) going to be valid after the bankruptcy? Buying a car is not like buying a plane ticket or a pair of shoes. If a car company goes bankrupt, they will not return. Period.

    March 30, 2009 12:49 pm at 12:49 pm |
  25. Anonymous

    You all hear that giant sucking sound? Its our National Debt growing by $ one million dollars every minute and we are thinking of giving these low lifes more money.
    Reorganize, get rid of the UAW and all their baggage and start making cars that people will buy that conserve fuel with alternate sources of energy.
    While we are at it, get Barry a monitor that he doesn't have to concentrate so hard on while reading the script. His head was spinning back and forth, but his eyes were practically glued to the screen and you libertals have the balls to criticize Bush for his speaking ability. Get a life.

    March 30, 2009 12:50 pm at 12:50 pm |
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