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Obama Aide Says Bankruptcy Can’t Be Ruled Out for Automakers

LET EM GO BANKRUPT

By Roger Runningen

Feb. 17 (Bloomberg) -- President Barack Obama’s chief spokesman said the administration can’t rule out a restructuring through bankruptcy for struggling automakers, while adding the industry is “tremendously important” to the economy.

White House press secretary Robert Gibbs said the administration won’t “prejudge” the next steps for General Motors Corp. and Chrysler LLC until the automakers present their own plans under terms of a government aid package.

“I wouldn’t preclude policy choices, particularly since we haven’t seen details,” Gibbs told reporters traveling with the president today to Colorado. The auto companies “represent a huge part of our manufacturing base, and to have a strong and viable auto industry is tremendously important for the future.”

GM and Chrysler must submit a report today on progress in cutting labor and debt costs worldwide to keep $13.4 billion in U.S. government aid. GM may seek support beyond an $18 billion request made Dec. 2 because of worsening economic conditions, people familiar with the automaker’s plan said. Chrysler has said it needs at least $3 billion in addition to $4 billion it received.

Obama has decided against naming a “car czar” to oversee a revamping of the auto industry. Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers instead will head a task force that will evaluate the plans submitted by GM and Chrysler.

Obama will be in Denver this afternoon where he will sign the $787 billion economic stimulus bill passed by Congress last week and highlight the energy development components of the legislation.

To contact the reporter on this story: Roger Runningen in aboard Air Force One at [e-mail]

Last Updated: February 17, 2009 14:26 EST