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News Wrap: GM Moves Closer to Bankruptcy

In the day's other news, General Motors moved one step closer to bankruptcy as bondholders rejected the company's offer to trade bond debt for G.M. stock, and Chrysler's lawyers asked a federal bankruptcy court to allow it to sell the bulk of its assets to Fiat.

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    General Motors moved to the brink of bankruptcy today, while Chrysler had a critical hearing to avoid outright liquidation. G.M. faces a government deadline to work out restructuring plans by Monday, but most of its bondholders refused earlier today to swap debt for stock.

    Still, White House press secretary Robert Gibbs said bankruptcy is not necessarily a foregone conclusion.

  • ROBERT GIBBS, White House Press Secretary:

    I think the deadline is near, but it's not passed yet. The team continues to work on trying to get all of the stakeholders involved to move and make progress. And they're going to continue to do that up until that deadline.


    By some accounts, G.M.'s bondholders might have received as much as a 20 percent stake in the company, but their refusal means the government's stake will likely rise from 50 percent to nearly 70 percent.

    And Chrysler's lawyers asked a federal bankruptcy court today to approve selling most of its assets to Fiat. Chrysler said it's the only chance to avoid being sold off piece by piece.

    In other news today, Wall Street lost ground over fears that the rising cost of borrowing money will hurt the recovery. That's after interest rates rose sharply at an auction of Treasury bonds. The Dow Jones Industrial Average lost 173 points to close at 8,300. The Nasdaq fell 19 points to close at 1,731.

    The nation's banks have returned to profitability. They earned $7.6 billion in the year's first quarter. The federal agency that insures the banks, the FDIC, reported that today. It also said the number of problem banks topped 300, the most in 15 years.

    In Iraq, a roadside bombing killed a U.S. soldier in Baghdad. At least 20 Americans have died in Iraq so far this month, including 5 who were shot by a fellow U.S. soldier. It's the deadliest month for U.S. troops in Iraq since last September, when 25 were killed.

    The toll of death and destruction from a tropical cyclone continues to climb in eastern India and Bangladesh. Nearly 200 people have died there since the storm hit Monday. Heavy rains and mudslides have destroyed thousands of homes. More than 2 million people are stranded in their villages with no access to food and water. The death count was expected to rise as rescue workers reach remote areas.

    The U.S. government warned today carbon dioxide pollution linked to global warming will rise nearly 40 percent by 2030. The Energy Information Administration said it will take mandatory cuts in greenhouse gas emissions, including carbon dioxide, to stop the trend. Congress is now considering legislation to reduce greenhouse gases 17 percent by 2020.