Obama: With Bankruptcy, General Motors Will Emerge Stronger

By Michael Combier-Talk Radio News Service

Two months after laying his plan with his Auto Task Force to keep struggling U.S. auto giants from collapsing, President Barack Obama announced today that General Motors has filed for Chapter 11 bankruptcy.

“Working with my Auto Task Force, GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again. It’s a plan tailored to the realties of today’s auto market – a plan that positions GM to move toward profitability, even if it takes longer for our economy to fully recover; and it’s a plan that builds on GM’s recent progress in making better cars,” Obama said.

Also today, Fritz Henderson, GM President and CEO, said that: “The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunity for us to reinvent our business. We are going to do it once and do it right. The court-supervised process we are pursuing provides us with powerful tools to accelerate and complete our reinvention, as well as strong safeguards for our customers and our business. We are focused on the job at hand, for the benefit of our customers, employees, dealers, suppliers, retirees, taxpayers, investors and other stakeholders.”

Obama said that GM will build a larger share of its cars in the U.S. and will be more committed to building more fuel-efficient cars.

In addition to the $19 billion already given to the company with federal loans, Obama said that the federal government is investing about $30 billion in GM which will “entitle American taxpayers to ownership of about 60 percent” in the auto company. Obama said his administration was doing this to protect jobs and “that is the only way to help GM succeed.”

The Obama Administration has no interest in running GM or making decisions for the auto company in the future, Obama said.

“GM will be run by a private board of directors and management team (that) will call the shots and make the decisions about how to turn this company around,” said Obama. “The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions.”

But “building a leaner GM will come at a cost. It will take a painful toll on many Americans who have relied on General Motors throughout the generations… More jobs will be lost. More plants will be close. More dealerships will shut their doors, and so will many parts suppliers,” said President Obama.