Obama: Chrysler Bankruptcy Wise Move

The president of the United States does not usually announce business deals and bankruptcies, but these are not usual times. President Obama announced Thursday that troubled automaker Chrysler would head into bankruptcy with the promise of up to $6 billion in taxpayer money to try to salvage the company.

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris. Chrysler Corporation filed for bankruptcy protection today. Bankruptcy would enable the company to clear the final hurdles of a merger with Italian automaker Fiat. President Obama announced today that those merger negotiations have concluded. The president said the move will likely save the jobs of tens of thousands of autoworkers and employees of supplier companies. NPR's Don Gonyea reports from the White House.

DON GONYEA: This was deadline day for Chrysler, the end of the 30-day period that President Obama gave the automaker to enter into a marriage with Fiat. The company has also been involved in intense negotiations with debt holders and with the United Autoworkers Union, all overseen by administration officials. Here's the president.

President BARACK OBAMA: And today, after consulting with my auto task force, I can report that the necessary steps have been taken to give one of America's most storied automakers, Chrysler, a new lease on life.

GONYEA: As part of the deal, Mr. Obama also pledged $8 billion more in taxpayer money. He said Fiat will help distribute Chrysler products, including Jeeps and minivans, to a global market.

Pres. OBAMA: Fiat has already agreed to transfer billions of dollars in cutting-edge technology to Chrysler to help them do the same. Fiat's also committed to working with Chrysler to build new, fuel-efficient cars and engines right here in America.

GONYEA: But the president also used the bully pulpit today, scolding those Chrysler debt holders who did not make the kind of concessions the United Autoworkers and some of the major banks did. The failure to reach an agreement to reduce all of Chrysler's debt is what is forcing the company to go into bankruptcy to complete the Fiat merger.

Pres. OBAMA: A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified, taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees and their families and communities.

GONYEA: Bankruptcy is the part of this that makes a lot of people close to Chrysler nervous.

Representative GARY PETERS (Democrat, Michigan): We've been fighting very aggressively to keep Chrysler out of bankruptcy, and that was certainly the preferred option.

GONYEA: That's Congressman Gary Peters, whose Michigan district includes Chrysler headquarters.

Rep. PETERS: However, I am hopeful that this bankruptcy will move quickly, anywhere in the 30- to 60-day range.

GONYEA: Chrysler Chairman Robert Nardelli, meanwhile, had this to say on CNBC today.

Mr. ROBERT NARDELLI (Chairman, Chrysler): Obviously, there's a huge amount of work, and a significant challenge, anytime you enter into a Chapter 11 filing. But I think given where we are and the timeframe we were working against, it ended up being the only solution.

GONYEA: Once that process begins, though, everything is subject to change, even the deals already reached with the big banks and with the UAW. An administration officials says it's very likely those agreements will be honored, though he acknowledged it's not 100 percent sure.

This afternoon, Press Secretary Robert Gibbs said the administration would weigh in on behalf of those who have already reached agreements with Chrysler.

Mr. ROBERT GIBBS (White House Press Secretary): I think it's safe to assume that we will present a case with - render an opinion as to why we think the deal is workable while we're confidant that a majority of the stakeholders involved are onboard, and why we think it's in the best interests of all those involved.

GONYEA: In the meantime, officials and workers at General Motors are watching all of this closely. GM's deadline comes in another 30 days.

Don Gonyea, NPR News, the White House.

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