Task Force Not Seeking Bankruptcy for Chrysler, GM
The lead adviser to President Obama’s task force on autos said in an interview that the team’s goal is not to force Chrysler or GM into bankruptcy, but in fact to keep them from it if possible.
“Bankruptcy is not our goal,” Rattner told the Detroit Free Press. “I’ve been in and around bankruptcy for 26 years as part of my private-sector work. It is never a good outcome for any company, and it’s never a first choice.”
Rattner said some problems couldn’t be solved outside of bankruptcy, but that the team’s goal “is to solve them outside bankruptcy to the maximum extent possible, and that’s where our focus is at the moment.”
It had been speculated that the task force could advise President Obama to call back the government loans from Chrysler and GM, effectively forcing them into bankruptcy. Discussion of a “pre-packaged” or government-funded bankruptcy has also arisen throughout the last few months.
Rattner also reiterated the importance of helping suppliers as well as the Detroit three. “The supplier problem is very, very urgent. They have not yet received any government help. They have been left on their own. We need to see if there’s some way to help them that is sound and consistent with our overall approach to this industry.”
Despite the possible calamity of a Detroit three failure, a supplier base collapse would be even more catastrophic to the economy. The supplier chain is used not only by the Detroit three, but also by other automakers with plants in the U.S., including Toyota and Honda.
“We have to be thoughtful about it,” Rattner warned, “because the government can’t be in the business of helping every company in America that gets into trouble.”
Despite the fact that initial legislation called for a decision to be made regarding whether or not Chrysler and GM could remain viable – and therefore keep their government loans – on March 31, Rattner says the panel will not be restricted by that deadline.
“It’s entirely possible, in fact I think it’s more than likely, that what you will see is not a single announcement at a point in time that’s the beginning of the end of our policy efforts for the auto industry, but rather a series of actions over perhaps a reasonably long period of time to solve this problem,” he said.
Source: The Detroit Free Press