GM and Chrysler’s viability plans were due this week to the government as a condition of receiving more loans to help keep the automakers’ doors open. Obama’s administration said neither plan would be good enough.
The Obama administration even asked GM CEO Rick Wagoner to resign, which he did Monday morning.
While Chrysler and GM significantly restructure, the government will provide money to both automakers to keep them operating for several weeks. Bankruptcy hasn’t been ruled out for either company, CNN Money reports.
Obama is expected to make an announcement later Monday with his plans for the companies, which have already received $17.4 billion in loans.
GM CEO Rick Wagoner stepped down Monday morning, as requested by the Obama administration. GM COO Fritz Henderson will replace him.
Obama told Chrysler that its best option to stay alive would be to merge with Fiat. Chrysler will have 30 days to work out the merger with Fiat. If the merger deal happens, Chrysler will get an additional $6 billion loan from the government.
GM will have 60 days in which to restructure and prove its viability to the government. If the company can show its viability, it will receive more money, but it wasn’t announced how much.
Wagoner was a 32-year veteran of GM who has served as CEO since 2000. Wagoner will be replaced by GM’s chief operating officer, Fritz Henderson.
"On Friday I was in Washington for a meeting with administration officials,” Wagoner said in a statement on GM’s Web site. “In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have."
Any warranties on vehicles GM and Chrysler sell during the restructuring process will be backed-up by the government in an effort to calm consumers’ fears about buying cars from either troubled automaker.