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Obama to Automakers: It’s My Way or the Highway

April 1, 2009


The president’s plan for General Motors and Chrysler, announced yesterday, continues to get top billing in the press. Obama took a hard stance with the struggling automakers, giving GM 60 days to come up with a viable, not to mention drastic, restructuring plan, and Chrysler 30 days. If the companies fail to do this, he would allow them to file for bankruptcy. The New York Times reports that, as a result, the United Automobile Workers, which along with bondholders has thus far “balked” at the GM’s demands, “will be asked to make even bigger concessions on a new wage and benefits contract and health benefits for retirees. Bondholders will most likely be forced to accept a deep discount on the price of their debt as well as agree to take GM stock in lieu of debt repayments.” In addition, Chrysler must merge with Fiat by April 30, Obama said.

The Wall Street Journal concludes that Obama’s plan stems not only from his interest in saving jobs but also from the chance to push “other policy prescriptions, in particular creating a ‘company of the future’ with clean and energy-efficient vehicles, a frequent campaign theme during Mr. Obama’s quest for the presidency.” The plan, it says, is also “fraught with political risk and controversy” as it is now obvious that the administration will be taking its largest role yet in the operations of the automakers, a role that “dwarfs that of any other company receiving U.S. aid.”

The story continues …..

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