GM, Chrysler take off training wheels

MCT News Service
Fritz Henderson, CEO of General Motors.


Now that Michigan State’s magical run through the NCAA men’s basketball tournament is over, it is time to watch a different scoreboard. The clock is ticking on General Motors and Chrysler, now that President Barack Obama’s administration has thrown down the gauntlet: Fix your broken companies soon or go bankrupt.


It is hard to argue with reality. Many taxpayers (especially those who don’t live in Michigan) have grown tired of government bailouts.


The federal government is providing the IV line to these sickly companies, so we ask Obama’s auto team to remove it carefully. The government has a stake in making sure bankruptcy for GM or Chrysler is not a free fall, but a transition to a stronger company.


In some respects, the president is handling this properly. It is significant, for example, that the federal government will stand behind vehicle warranties if either automaker declares bankruptcy.


It also is significant that Obama is giving both more time — 30 days for Chrysler to reach a partnership with Fiat and 60 days for GM to get meaningful concessions from unions and bondholders. Only deadlines with real consequences might produce the sort of action that can get these companies to stand on their own again.


The Obama team’s intervention has produced second-guessing. Notably, the ouster of GM chief Rick Wagoner comes across as pointless muscle flexing, particularly as the administration tapped a replacement, Fritz Henderson, who is no less of a company man than Wagoner.


Ultimately, we appreciate that the federal government is trying to get out of the automotive business. Last week’s developments put GM and Chrysler on the road to standing or sinking on their own.


Of course, we all want to see them survive, but that will not happen with more cash alone. GM and Chrysler now will have to take off the training wheels and survive without taxpayer loans.