March 6, 2009 - Auto Task Force Meeting - White House, Washington D.C.

Senior members of the Obama administration autos task force met at the White House on Friday to review restructuring plans for General Motors Corp and Chrysler LLC, while dealerships pressed the government to revise a plan aimed partly at helping them.

The meeting came as GM shares plunged for a second straight day on renewed concerns about its prospects for survival amid the recession. The automaker said again on Friday it preferred to restructure outside of bankruptcy court.

White House spokesman Robert Gibbs said before the meeting that the team was trying to figure out how government could be "the best partner" for an industry wracked by credit woes and staggering sales declines that worsen monthly.

"We need a strengthened, retooled, restructured and re-imagined auto industry in this country. Whether the auto industry as we have it now is exactly what we have in a year is something that I think is going to be determined by a lot of factors," Gibbs said.

The task force meeting was led by Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers, the Treasury Department said. They also called senior economic, transportation, energy, labor and environmental officials to the table to review restructuring plans and options.

The panel faces a March 31 deadline to determine whether GM and Chrysler can be commercially viable and deserving of more government aid. The two received a $17.4 billion bailout in December and have asked for an additional $22 billion.

The task force spent part of this week focusing on requirements in the December bailout that GM and Chrysler negotiate significant concessions with labor and to substantially reduce their debt by month's end.

GM and bondholders, whose representatives met with the task force on Thursday in Washington, have been in negotiations to convert a sizable portion of debt to equity in a deal similar to one announced by Ford Motor Co this week.

Gimme Credit analyst Shelly Lombard said the administration is unlikely to extend the March timeline for a deal, especially in light of the agreement announced this week at Ford to cut roughly 40 percent of its $25.8 billion debt by offering creditors cash and new shares.

"We'd expect the task force to push GM into bankruptcy rather than push back the deadline" if they cannot reach a settlement," said Lombard.

"We'd expect the government to provide a DIP (debtor-in-possession) loan backstop rather than allowing a free fall bankruptcy that could lead to GM and supplier liquidations," Lombard said.

Task force staff members have already reviewed GM and Chrysler's turnaround plans with their top executives.

Also on Thursday, the task force met with Fiat SpA Chief Executive Sergio Marchionne to review a potential alliance with Chrysler.

On Friday, auto dealers led by the National Auto Dealers Association had "good, productive meeting" with the task force, NADA President John McEleney, an Iowa dealer, told Reuters.

McEleney said the participants talked a "great deal" about the difficulty for many dealers of financing their inventory.

The group has asked the administration to revise a loan program unveiled by the Treasury Department and the Federal Reserve in light of an auto finance industry credit downgrade that has made financing harder to obtain.

"That (the loan initiative) would have gone a long way to solving the problem except for that wrinkle," McEleney said.

About 1,000 dealerships have closed over the past year, resulting in 50,000 job losses, the dealer group said. Consumers take out loans for 95 percent of vehicle purchases.

Separately, an administration official said lead task force advisers Steve Rattner and Ron Bloom plan to visit GM and Chrysler facilities in Detroit on Monday as well as meet with the United Auto Workers union.

They do not plan to visit Ford, which has not sought a bailout.

Original Story - Reuters