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(AP) -  President Barack Obama said Monday that
neither General Motors nor Chrysler has proposed sweeping enough
changes to justify further large federal bailouts, and demanded
"painful concessions" from creditors, unions and others as their
price for survival.


      Obama also raised the possibility of a controlled bankruptcy to
help either or both "restructure quickly and emerge stronger" -
uttering the term that industry and union officials have warned
repeatedly could lead to the collapse of an entire domestic
industry.


      With his words, Obama underscored the extent to which the
government is now dictating terms to two of the country's iconic
corporations - forcing the departure of Rick Wagoner as CEO of
General Motors, and bluntly warning it may pull the plug on either
or both companies.


      The Bush administration late last year approved $17 billion in
federal funds to help GM and Chrysler survive. It also demanded
both companies submit restructuring plans that the Obama
administration would review.


      Even as he pronounced their effort unsatisfactory, the president
said the administration will offer General Motors "adequate
working capital" over the next 60 days to produce a reorganization
plan acceptable to the administration.


      He said Chrysler's situation is more perilous, and the
government will give the company 30 days to overcome hurdles to a
merger with Fiat, the Italian automaker. If they are successful
"we will consider lending up to $6 billion to help their plan
succeed," he said.


      Obama spoke at the White House with the Big 3 standing at yet
another crossroads. As the president noted, the industry has shed
over 400,000 jobs in the past year as the recession took hold.


Officials announced last week bailout funds would be made available
to companies that supply the automakers, an attempt to keep them
afloat.


      Obama said he is committed to the survival of an auto industry -
on terms that will allow it to compete internationally.


      "But we also cannot continue to excuse poor decisions," he
said. "And we cannot make the survival of our auto industry
dependent on an unending flow of tax dollars."


      He also said some of the industry's progress has scarcely been
noticed. He mentioned that the North American car of the year in
2008 was produced by GM.


      "Let me be clear: the United States government has no interest
or intention of running GM," he said.


      But that was at the same time he was formally announcing the
departure of Wagoner, whom administration officials forced into
retirement on Sunday in preparation for the president's remarks.


      "This is not meant as a criticism 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."


      Other changes at GM include new directors on its board. Fritz
Henderson, GM's president and chief operating officer, became the
new CEO. Board member Kent Kresa, the former chairman and CEO of
defense contractor Northrop Grumman Corp., was named interim
chairman of the GM board.


      "The board has recognized for some time that the company's
restructuring will likely cause a significant change in the
stockholders of the company and create the need for new directors
with additional skills and experience," Kresa said in a written
statement.


      The Obama move comes amid public outrage over bonuses paid to
business leaders and American International Group executives - set
against a severely ailing economy.


      GM failed to make good on promises made in exchange for $13.4
billion in government loans. Chrysler, meanwhile, has survived on
$4 billion in federal aid during this economic downturn and the
worst decline in auto sales in 27 years. 


In progress reports filed
with the government in February, GM asked for $16.6 billion more
and Chrysler wanted $5 billion more.


      GM owes roughly $28 billion to bondholders. Chrysler owes about
$7 billion in first- and second-term debt, mainly to banks. GM owes
about $20 billion to its retiree health care trust, while Chrysler
owes $10.6 billion.

      GM and Chrysler employ about 140,000 workers in the U.S. In
February, GM said it intended to cut 47,000 jobs around the globe,
or almost 20 percent of its work force, close hundreds of
dealerships and focus on four core brands - Chevrolet, Cadillac,
GMC and Buick.
      

Gallery

GM CEO Wagoner to step down at White House request

Progress made in bailout plan for Big 3 automakers

Chrysler exec: failure could spark depression

Business and Economic News

Politics and Government News

President Barack Obama and his top advisers have determined that
neither company is viable and that taxpayers will not spend untold
billions more to keep the pair of automakers open forever.

White House questions viability of GM, Chrysler

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