to File for Bankruptcy; Will Get "New Lease on Life," President
President Barack Obama announced today that after further consultation with his Automotive Task Force and review of Chrysler's latest plan-submitted within the 30-day deadline provided at the end of March-it appears the company will be filing for bankruptcy.
" as I've said from the start, we simply cannot keep this company, or any company, afloat on an endless supply of tax dollars," said the president during a press conference today. "My job, as President, is to ensure that if tax dollars are being put on the line, they are being invested in a real fix that will make Chrysler more competitive."
The president stressed that filing for bankruptcy does not mean the end of Chrysler, though.
"No one should be confused about what a bankruptcy process means. This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler's revival," he said. "Because of the fact that the UAW and many of the banks, the biggest stakeholders in this whole process have already aligned, have already agreed, this process will be quick. It will be efficient. It's designed to deal with those last few holdouts, and it will be controlled."
He also noted that it will allow those who work at Chrysler to retain their jobsand those who wish to purchase Chryslers to do so.
"It will not disrupt the lives of the people who work at Chrysler or live in communities that depend on it," he said. "And it will not affect the ability of American consumers to buy a Chrysler, or to get it serviced and repaired. It's a process that has the full support of Chrysler's key stakeholders and the full backing of the United States government. And I have every confidence that Chrysler will emerge from this process stronger and more competitive."
Regarding Fiat's possible partnership with Chrysler, President Obama noted that the federal government will continue making additional loans to support the partnership, and that the company will need to re-pay all of these loans before Fiat can take a majority ownership stake in the company.
"It's a partnership that will give Chrysler a chance not only to survive, but to thrive in a global auto industry," said the president. "Fiat has demonstrated that it can build the clean, fuel-efficient cars that are the future of the industry, and as part of this agreement, Fiat has already agreed to transfer billions of dollars in cutting-edge technology to Chrysler to help them do the same. Fiat is also committed to working with Chrysler to build new fuel-efficient cars and engines right here in America."
President Obama also discussed the sacrifices that have been made by many throughout both the automotive and banking industries to make restructuring through bankruptcy possible.
"Several major financial institutions, led by J.P. Morgan, agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations," he said. "The German automaker, Daimler, agreed to give up its stake in Chrysler and contribute to the company's pension plan, further easing Chrysler's financial burden. And countless Americans across our country will be making major sacrifices, as well, as a result of plans to consolidate dealers, brands, and product lines."
As part of this plan, GMAC, the independent bank holding company that finances General Motors, will now finance new Chrysler sales, as the President noted that Chrysler Financial, which finances Chrysler cars and dealers, cannot continue to survive without "an unacceptably large stream of taxpayer money."
"We will be providing additional capital to GMAC to help unlock
our frozen credit markets and free up lending so that consumers can get
auto loans and dealers can finance their inventories-a measure that will
help stabilize not only our auto market, but the broader economy, as well,"
Automotive suppliers also will be getting assistance, he noted.
"Tomorrow, the Small Business Administration will be announcing it is expanding eligibility for some loans to include more suppliers and dealers, including RV dealers," he said.
Obama added, "We have made great progress. We can make great American cars. Chrysler and GM are going to come back. And I am very confident that we're going to be able to make once again the U.S. auto industry the best auto industry in the world."
At press time, officials at Chrysler and Mopar, which supplies OE parts
including glass, for the company, had not returned calls for comment.
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