Bankruptcy not out of the question for GM, White House aide says
Gordon Trowbridge / Detroit News Washington Bureau
WASHINGTON -- A top White House adviser on Sunday refused to rule out
bankruptcy for General Motors as the deadline for the domestic
carmakers' restructuring plans looms this week.
"We're going to need a restructuring of these companies. How that
restructuring comes about is going to have to be determined," said David
Axelrod, a senior adviser to President Obama, said on NBC's "Meet the
Axelrod's comments came in response to questions about a Wall Street
Journal report on Saturday that GM will offer two options when it files
its federal restructuring plan on Tuesday: A continued infusion of
federal aid to keep the company in business, or a government-financed
The plan is a condition of the more than $13 billion federal loan GM
received in December. The plan must outline how the company will return
to competitiveness; the government has the option of recalling the loan
and essentially forcing a bankruptcy by the end of March if Obama
administration officials do not believe the company is making adequate
Chrysler LLC must also submit a plan to justify its own federal bailout
money; Ford Motor Co. has not yet asked for aid, but could if its
business prospects continue to slip.
Axelrod's comments continue a pattern of administration comments on the
issue: refusing to address the bankruptcy issue directly, either to
embrace it or to rule it out. In a roundtable discussion with The
Detroit News and other regional newspapers this week, Obama also did not
directly address bankruptcy.
Michigan lawmakers have forcefully opposed bankruptcy, saying the
companies would be unlikely to emerge from a bankruptcy because car
buyers would refuse to consider products from a bankrupt company. Any
bankruptcy would almost certainly still involve a massive federal
financial commitment, because private capital markets are unlikely to
provide the financing that would be necessary.
"We need an auto industry in this country," Axelrod said Sunday. "We
have an interest in seeing the auto industry survive. But it's going to
take a real restructuring."