General Motors Corp. and the White House sought to portray the automaker’s landmark bankruptcy Monday as a quick and easy affair that would end within months.
But some experts expect GM’s troubles to linger for years, even if it emerges from bankruptcy within a few months as President Obama hopes. And it could take years, if ever, for the taxpayers to recover the $53 billion of federal funds invested in GM.
In a single day, two of the Big Three automakers — once the very symbol of American industrial might — changed their statuses dramatically. GM filed for bankruptcy protection, the fourth-largest such filing in U.S. history. In the same New York court, a judge approved the sale of Chrysler LLC to an Italian-led consortium, putting the smaller automaker on track to emerge from bankruptcy within days.
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Mr. Obama touted the ease in which his restructuring plans have been accepted but also acknowledged the gravity of the bankruptcies and public skepticism about the wisdom of government intervention. He said it was necessary — despite the pain and high costs — to put what was once the nation’s largest automaker on the road to a healthier future with the help of so much taxpayer cash.
“I recognize that this may give some Americans pause,” he said. “What we are not doing - what I have no interest in doing — is running GM. … Our goal is to get GM back on its feet, take a hands-off approach and get out quickly.”
On Wall Street, the Dow Jones Industrial Average surged 221.11 points, partly in reaction to the bankruptcy filing.
Republican lawmakers criticized the GM deal, which will give the government 60 percent ownership. They questioned how and when the government will exit the car business. Officials from Capitol Hill to Wall Street also expressed concern that the auto program could turn into a long-term dependent relationship with ailing industries that would sap the federal budget.
“This agreement may buy some time, but does nothing to ensure GM’s success,” said House Minority Leader John A. Boehner, Ohio Republican. “The only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars. Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability?”
While Mr. Boehner and many others have called on the White House to reveal its “exit strategy,” even senior administration officials could not say when or how the government would get out of the car business.
The administration insisted that it would invest no more than the $53 billion outlined in the reorganization plan and would not involve itself with day-to-day corporate matters after appointing most of the reorganized company’s board of directors.
The monumental bankruptcy plan listed more than 100,000 creditors and proposed to close nine factories and idle three more. Meanwhile, the German government picked Magna International, a Canadian car-parts maker, to buy GM’s Opel unit in Europe.
But even after GM emerges from bankruptcy, senior officials said, the government will have to engage in major decisions at the company while also playing the role of “passive investor,” overseeing its investment in the company for an indefinite time.
Some executives in Detroit have suggested that the White House Auto Task Force could become a permanent agency similar to Japan’s Ministry of International Trade and Industry, which nurtured Japan’s auto industry into an international juggernaut in what is sometimes referred to as “Japan Inc.”View Entire Story
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