Bankruptcy not out of the question for GM, White House aide says
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 Press."
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 bankruptcy.
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 progress.
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."