Taken for a ride

GM and Chrysler failed to produce adequate restructuring plans and so President Barack Obama was right to refuse them more money, writes the International Herald Tribune.

The International Herald Tribune

President Obama struck an acceptable compromise on [March 30] between two unappealing options: letting General Motors and Chrysler go bankrupt right away or giving them tens of billions of dollars more while hoping for the best. Instead, he decided to finance their operations for just a matter of weeks while forcing them to come up with a better plan to overhaul their businesses.

Now that the government is in control of the process, it must stick to its stated objectives and deadlines. If Chrysler can’t reach an acceptable merger deal with Italy’s Fiat in a month, the government must let go, even if this means certain liquidation.

The government has 60 days to clean up G.M.’s balance sheet, eliminate debts and shed product lines and dealerships so it can emerge as a smaller, viable car company. The Obama administration should stand by its offer to support both companies through a quick and controlled bankruptcy process.

The government’s $17.4 billion bailout of G.M. and Chrysler last year was the right move. Including jobs at parts manufacturers and car dealers, hundreds of thousands of jobs were on the line. Still, the automakers failed to put together adequate restructuring plans that guaranteed their survival as self-sustaining companies at the other end of the taxpayers’ multibillion-dollar bailout. The government was right to refuse the additional billions they requested. …