A senior Obama administration official, speaking on the condition of anonymity because no announcement has been made, told the Associated Press that a presidential task force will direct the restructuring of General Motors and Chrysler. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers will lead the panel.
The Presidential Task Force on Autos will draw officials from several agencies including the Departments of Treasury, Labor, Transportation, Commerce and Energy, according to the administration official.
“We’re going to need a restructuring of these companies,” David Axelrod, an Obama administration adviser, said on NBC’s “Meet the Press” Sunday. Restructuring of the companies would “require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company,” Axelrod said.
A senior administration official, also speaking on the condition of anonymity, told the New York Rimes that Ron Bloom, a restructuring expert who has advised the labor unions in the troubled steel and airline industries, would be named a senior adviser to the Treasury Department on the auto crisis.
The administration official told the Times that the Presidential Task Force on Autos would review the companies’ submissions for at least a week before responding publicly.
Tuesday is the deadline for GM and Chrysler to show how they can repay billions in loans and become viable despite a huge drop in sales. GM and Chrysler received $17.4 billion in federal loans late last year.
GM and Chrysler are both finalizing their plans but have yet to reach agreements on concessions with bondholders and the United Auto Workers union. Talks with the union ended Friday before the two sides resumed negotiations Sunday afternoon.
“Chrysler LLC is currently meeting with the UAW. The Company is working diligently on its viability plan and will submit it by its deadline on February 17,” spokeswoman Shawn Morgan said in a statement, reported the Washington Post.
Detroit auto executives have previously ruled out filing for Chapter 11 bankruptcy restructuring, arguing that the public would not buy cars from a bankrupt company.
Chrysler chairman Robert L. Nardelli has said his company needs another $3 billion in addition to the $4 billion loan it received in January, while GM has borrowed $9.4 billion so far and is scheduled to receive another $4 billion, if the Treasury is satisfied with its revamping plan.
Ford Motor Company is not taking federal aid, and therefore does not need to submit plans for approval at this time.