Two ailing U.S. carmakers - General Motors and Chrysler - are facing an uncertain future after President Obama Monday rejected their restructuring programs and requests for more taxpayer money.
The new chief executive of General Motors, Fritz Henderson, says there is an increased risk of his company going bankrupt. Until 2007, GM was the world's biggest car company. Its share price fell on Monday to about $2.70 - a more than 90 percent decline in recent years.
Henderson said GM prefers to reorganize outside of bankruptcy court. President Obama has given the company 60 days to develop a revised business plan. And more deep concessions apparently are being asked of creditors and unionized workers.
Austin Goolsby, a top advisor to President Obama, told CNBC television that he is hopeful GM as well as Chrysler will avoid bankruptcy.
"The entire effort here is to try to get a package that will rapidly turn them around," said Goolsby. "We aren't talking about, as the president said, we are not talking about spending years in court and restructuring deals. This has to be a rapid turnaround to make them viable in relatively short order."
Chrysler has fewer choices than GM Mr. Obama says the company needs a partner and Fiat of Italy is the only firm that has stepped forward.
Chrysler's owner, New York-based Cerberus Capital, says substantial hurdles remain to closing that deal. Chrysler needs money and has only 30 days to resolve its future. But neither Cerberus nor Fiat are willing to put up the additional cash. Under the proposed deal, Fiat would manufacture small cars at Chrysler's North American factories and obtain up to 49 percent ownership of the company.
Ford, the second biggest U.S. car company, also is struggling but has not asked for government assistance.
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