US auto task force aims to avoid bankruptcies
US President Barack Obama's automotive task force aims to solve the industry's woes "outside bankruptcy to the maximum extent possible," the panel's lead advisor said Monday.
"Bankruptcy is not our goal," Steven Rattner told the Detroit Free Press.
"I've been in and around bankruptcy for 26 years as part of my private-sector work. It is never a good outcome for any company, and it's never a first choice."
Rattner cautioned however that bankruptcy was "sometimes necessary in order to solve problems that can't be solved outside bankruptcy. Our goal is to solve them outside bankruptcy to the maximum extent possible, and that's where our focus is at this moment."
Two of Detroit's "Big Three" automakers, General Motors and Chrysler, have asked for another 21.6 billion dollars in US aid on top of the 17.4 billion in emergency loans approved in December as they struggle to survive a collapse of auto sales amid a deepening economic crisis.
Ford, the other in the trio, has said it has enough cash to survive the downturn without government aid.
The troubled supplier industry has asked for a 25.5-billion-dollar bailout and has warned that deep production cuts could lead to a cascade of bankruptcies that would cripple the industry.
Rattner said the panel is looking to find a way to help suppliers but may wait until after a March 31 deadline to decide on additional aid to GM and Chrysler.
"The supplier problem is very, very urgent," Rattner said.
"They have not yet received any government help. They have been left on their own. We need to see if there's some way to help them that is sound and consistent with our overall approach to this industry."
But, he added, "we have to be thoughtful about it, because the government can't be in the business of helping every company in America that gets into trouble."
One difficulty the panel has faced is getting bondholders to agree to help GM and Chrysler reduce their debt load by two thirds, as required under the terms of their government loans.
"I think bondholders are being quite difficult," Rattner told the paper.
The United Auto Workers union, which must also agree to major concessions by March 31 under the terms of the deal, is "behaving in a very constructive way," Rattner said
"Whether we will ultimately see eye to eye I don't know," he added. "So far, I'm heartened by that."