Obama says GM will be ‘strong,’ doesn’t mention bankruptcy

Obama says GM will be ‘strong,’ doesn’t mention bankruptcy
 

Automotive News | May 23, 2009 – 12:00 pm EST

 

WASHINGTON (Reuters) — President Barack Obama said he is confident General Motors would thrive after restructuring while making no mention whether GM might have to enter bankruptcy to complete reorganization.

Obama, in an interview with the C-SPAN cable television network, said he wanted the government to get out of the auto business as soon as possible, and he said if some auto jobs never return, the government will work to ensure workers are effectively retrained.

"Ultimately, I think that GM is going to be a strong company, and we are going to be pulling out as soon as the economy recovers and they’ve completed their restructuring," Obama said in the interview scheduled to air today.

GM is facing a government-imposed June 1 deadline to complete a sweeping restructuring that analysts believe will require a bankruptcy to complete. Obama was not asked about a potential GM bankruptcy during the C-SPAN interview and did not raise the issue himself.

Obama’s comments echo remarks he made on March 29 about Chrysler LLC before its U.S. deadline.

“I’m actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler auto company out there,” Obama said the night before Chrysler filed for bankruptcy.

The Chrysler plan is to sell substantially all of its assets to a new company owned by Fiat S.p.A., a UAW health care trust, and the U.S. and Canadian governments.

Keeping GM solvent

The Obama administration has injected $19.4 billion to keep GM afloat since the beginning of the year, including another $4 billion on Friday. The government stake is commitment is expected to rise to $27 billion after June 1.

GM has said it could file for bankruptcy if it fails to convince bondholders to agree to forgive some $24 billion they are owed, about 90 percent of the total.

Under Obama administration orders, GM has offered bondholders a 10 percent stake in the restructured company, a deal they view as unfair.

"My hope … is that we will see both GM and Chrysler having emerged from this restructuring process leaner, meaner, more competitive with a set of product lines that appeal to consumers, good cars that are fuel efficient and that look at the markets of tomorrow," Obama told C-SPAN.

He predicted a jump in auto sales once the U.S. economy recovers from the current recession because Americans are not buying enough vehicles to replace the ones that are being worn out.

"You are looking at a substantial market that is going to be available for U.S. automakers if they’ve made some good decisions now, and if they are building the kinds of fuel-efficient, high-performance cars that American consumers are hungry for," Obama said.

"I think GM and Chrysler can do that," he added. "We’re confident that they can emerge and take advantage of that new market and actually be very profitable and thrive, but it means going through some pain now."

Obama reiterated that he did not want the U.S. government, which would hold a majority stake in GM under the company’s proposal, to remain in the car business for long.

"We want to get out of the business of helping auto companies as quickly as we can," he said. "I have got more enough to do without that."

 

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