No Bail Out for GM & Chrysler - Bail Out Denied - Reporting Possible Death Sentence in 60 Days

I had to do a double take when I read this, amazed considering there are about 160,000 jobs directly with GM alone in the United States, but now multiple major press sites are reporting Obama Denies Bail Out for GM & Chrysler

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.

The Obama administration, however, has decided not to require the automakers to immediately repay government loan money they previously received, since that would force both companies into Chapter 11 bankruptcy.

A senior administration official told FOX News, "calling in the loans would not be a productive exercise for the American taxpayer since the companies don't have the money [to repay the loans] and it would simply put the companies into uncontrolled Chapter 11."

Obama was set to make the announcement at 11 a.m. Monday in the White House's foyer.

In an interview with CBS' "Face the Nation" broadcast Sunday, Obama said the companies must do more to receive additional financial aid from the government.

"We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge -- at the other end -- much more lean, mean and competitive than it currently is," Obama said.

Instead, the administration has decided to give Chrysler 30 days to work out a deal with Fiat and GM 60 days to come up with a new restructuring plan. Both companies will be provided with "some working capital" during those time periods.

A senior official said, "bankruptcy is not the goal," although there may be a "role for a court supervised process to effect the restructuring... different from Chapter 11."

The Huffington Post has more:

President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever.

In a last-ditch effort, the administration gave each company a brief deadline to try one last time to convince Washington it is worth saving, said senior administration officials who spoke on the condition of anonymity to more bluntly discuss the decision.

Is this incredible or what? We have obvious, well known, completely insolvent banks, not viable and they get billions and billions. Just a GM failure alone, not including Chrysler, has job loss estimates at 1,000,000 jobs.

Can't restructure to many some innovative alternative energy manufacturing here? Why no! We're too busy paying for worthless toxic fictional play money assets!

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Contracts only matter when they are with WS

Waggoner has left GM, been pushed out by the "Great One". They are demanding more cuts and immediate cuts because they/MI must sacrifice while Wall Street just gets more and more money to no use.

The only redeeming thing about the Obama machine is that I never gave it a dime. Didn't like him, didn't trust him, and he is making it plain why.

They're asking for another four years -- in a just world, they'd get 10 to 20 ~~ Dennis Kucinich

I'm not upset about Chrysler

Cerberus Capital Management has plenty of cash it could use to try to rehabilitate Chrysler if it chose to do so. Instead, it was using the US taxpayer as a chump.

GM is another matter. Although it has been horribly mismanaged (just in the last couple of years have many of its cars become worthy of comparison with Japanese models), you couldn't ask for a bigger example of the disconnect between the treatment of Wall Street and Main Street.

I agree on Gm vs. Chrysler

Cerberus can go to hell, although I worry about the workers but GM? Good God. Although GM is a hydra of offshore outsourced everything. I wonder if that had come into play at all because GM created this Medusa of global sourcing that clearly wasn't to "profitable" .

In terms of quality, honestly I don't get this entire rap. Their cars are cheaper than Toyota, Honda quite often and the repairs are also way cheaper.

Aside from completely devastating large portions

of the midwest, GM and to a lesser extent Chrysler are vital to our manufacturing base and possibly national security. Bankruptcy will not further those interests. This will require bold action on the part of the Administration and congress.

Appoint a nine person board that includes representation from unions. Hire a strong individual as CEO. Consolidate all assets of GM and Chrysler into this government corporation. The consolidated company would work to make the auto industry smaller and transition segments of the industry into other industries such as solar panels or wind turbines. Dept. of Commerce start developing a manufacturing strategy for the U.S

I still think that what we will have is

bankruptcy lite. They won't call it bankruptcy, because the perception of such a thing would have such a negative impact that it could actually hamper a recovery. But you will see version of things seen in a Chap 7. The shareholders are already burnt, same will now be for the bond holders (for the most part). The question now begs what about the unions? Obama can't afford to be seen harming a loyal Democratic constituent. At the same time, that doesn't mean they won't engage in reducing labor-related liabilities like the legacy costs.

You know, I actually smell an opportunity here. They could take that offloaded health care into a new health care agency that could become a proto-universal health insurance system.

I'll believe it when I see it

in all seriousness. I mean of course that is what you would do, I would do but what they are up to? Hmmmm, track record to me implies they are going to screw Michigan again and claim it's all because GM is not systemic risk...

well, when 1 million jobs disappear I sure have a funny feeling systemic risk is going to rear it's ugly head.

If Obama had a strategy to take all of the health care legacy costs out of the deal and move them into a huge new universal health care initiative, couldn't that be accomplished by not destroying the company?

Prove me wrong but I have a strong feeling that GM car sales are now going to plummet to almost nothing. Who wants to buy a car from a company that might not longer exist? How about getting parts, warranties honored, repairs, after market car value and so on?

I fear the repercussions are more in line with what the unions and EPI have been reporting, and GM itself.

I mean don't get me wrong, I doubt anyone will examine GM's massive "global sourcing" i.e. offshore outsourcing, labor arbitrage etc. agenda as being a key reason for this implosion and considering they have been spending billions in China, India and Brazil, with no one paying any will probably be a bone pickin' exercise by some astute researcher who will be ignored after the fact in some dusty financial forensic Academic paper somewhere...