Chrysler’s fall may help govt reshape GM

In Chrysler’s case,the tough job-cutting decisions had already been made and the government is taking only a small stake. An alliance with Fiat envisions selling the company’s cars in new markets around the world and adding cars that use Fiat’s fuel-efficient technology.

But in GM’s case,Obama will be forcing deeper cuts and becoming the controlling shareholder. He will also be overseeing the radical downsizing of GM’s work force as he is trying to reverse rising unemployment.

“GM is very different than Chrysler,” Rahm Emanuel,Obama’s chief of staff,said Friday. “But I suppose the one lesson for GM,and all the other players,is that this is a moment when a Democratic president said,‘I am really willing to let a company dissolve,and there’s not going to be an open checkbook.’ There’s got to be real viability.” No one thinks Obama is going to allow GM to be broken up,its assets sold or abandoned.

But if the Chrysler legal process unfolds as the White House hopes it will in coming weeks,the bankruptcy option may look increasingly attractive for GM as well,officials on Obama’s automotive task force said. “The threat of bankruptcy is very important in the negotiations with the bondholders and the dealers and others,” said David E Cole,chairman of the Center for Automotive Research in Ann Arbor,Michigan.