Barack Obama presents rescue plan after GM declaration of bankruptcy
Monday, June 1, 2009
In a televised speech from the White House at 16:00 UTC today, President of the United States Barack Obama presented a reorganization plan following the 12:00 UTC announcement by General Motors that it had filed for bankruptcy and Chapter 11 protection from its creditors, the largest bankruptcy of a U.S. manufacturing company.
Describing the problem with the company as one that had been “decades in the making,” Obama explained the rationale behind his proposed reorganization plan for General Motors. He stated that his intent was not to “perpetuat[e] the bad business decisions of the past,” and that loaning General Motors money, when debt was its problem, would have been doing exactly that. His plan, he stated, was for the United States government, in conjunction with the governments of Canada and Ontario (which he thanked for their roles alongside the government of Germany which he thanked for its role in selling a corporate stake in GM Europe), to become shareholders in General Motors. The United States government would hold a 60% stake. The government will give GM a capital infusion of US$30 billion in addition to the funds it has already received.
Of the government ownership he stated that he refused “to let General Motors and Chrysler become wards of the state”, and described the bankruptcy of Chrysler, and the bankruptcy of General Motors that he envisioned as being “quick, surgical, bankruptcies”. He pointed to the bankruptcy of Chrysler as an example of what he envision for General Motors, but stated that General Motors was a “more complex company” than Chrysler.
Responding to challenges voiced by political opponents, before the speech, that the federal government would actively participate in the affairs of the restructured company, he stated that he had “no interest” in running GM, and that the federal government would “refrain from exercising its rights” as a corporate shareholder for the most part. In particular, he stated that the federal government would not exercise its rights as a shareholder to dictate “what new type of car to make.” He stated that he expected the restructured GM to make “high quality, safe, and fuel-efficient cars of tomorrow,” and several times described what he anticipated as “better” and “fuel-efficient” cars, after a streamlining of GM’s brands.
He said to the general public that “I will not pretend that the hard times are over.” He described the financial hardship that some — shareholders, communities based around GM plants, GM dealers, and others — would undergo as a “sacrifice for the next generation” on their parts, so that their children could live in “an America that still makes things,” concluding that one day the United States might return to a time when the maxim (a widely-repeated mis-quotation of what Charles Erwin Wilson once testified before the U.S. Senate when nominated for the position of Secretary of Defense) would once more be true that “what is good for General Motors is good for the United States of America.”