President Barack Obama said on Monday said the U.S. cannot let its auto industry vanish, but didn’t rule out pain ahead for creditors, unions and other group affiliated with General Motors Corp, and Chrysler.
“Now is the time to confront our problems head-on and do what's necessary to solve them,” the President said at a press conference on Monday. “We cannot, we must not, and we will not let our auto industry simply vanish.”
Although the government has poured billions of dollars in capital into the companies to keep them afloat amid a tough recession, the President said this could not go on for much longer.
“These companies - and this industry - must ultimately stand on their own, not as wards of the state,” he said.
In their current forms, GM and private carmaker Chrysler LLC were not viable businesses, a report released earlier today from a task force commissioned by the President the government said.
The task force said both GM and Chrysler would be given 60 days and 30 days respectively to come up with “more aggressive” plans to prove they were viable before committing more taxpayer dollars to saving them. He left open the door to allowing them to go into bankruptcy.
“That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger,” he said. However he wanted to clarify that he didn’t mean that the companies would be broken up and sold off, or be stuck in litigation for yours.
He said using bankruptcy “to quickly clear away old debts that are weighing them down so they can get back on their feet” even as the companies’ operations continue to function.