WASHINGTON — President Barack Obama asserted unprecedented government control over the auto industry Monday, bluntly rejecting turnaround plans by General Motors Corp. and Chrysler LLC, demanding fresh concessions for long-term federal aid and raising the possibility of quick bankruptcy for either ailing auto giant.
Obama took the extraordinary step of announcing that the government will back new- car warranties issued by GM and Chrysler, an attempt to reassure consumers that their U.S.-made purchases will be protected even if the companies don’t survive.
“I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars,” Obama said in his first extended remarks on the industry since taking office nearly 10 weeks ago.
And yet, he added, “our auto industry is not moving in the right direction fast enough to succeed.”
Obama, flanked by several administration officials at the White House, announced a short-term infusion of cash for the companies and said it could be the last for one or both.
Funds for 30 more days
Chrysler, judged by the administration as too small to survive, got 30 days’ worth of funds to complete a partnership with Italian manufacturer Fiat SpA or another automaker.
GM got assurances of 60 days’ worth of federal financing to try to revise its turnaround plan under new management with heavy government participation. That would involve concessions from its union workers and bondholders. The administration engineered the ouster of longtime chief executive Rick Wagoner over the weekend.
Under Fritz Henderson, newly named chief executive, GM issued a statement saying it hopes to avoid bankruptcy but will “take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process.”
