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...confidence of prospective car buyers and sent a strong message to the United Auto Workers union and bondholders that the government is dead serious about implementing a major restructuring of both companies - and won't wince at bankruptcy if that's what is required to get the job done. GM's new CEO, Frederick A. Henderson, basically repeated that message at his Tuesday-morning press conference, even going so far as to say that bankruptcy was now "more probable," though not desirable. (See pictures of the remains of Detroit...
...capital or labor. And in a way that happens more frequently in literature than in life, Rattner and Bloom are neatly drawn avatars for the opposing sides of that argument. As such, they make a complementary team to resuscitate the moribund automakers. Out of money and out of options, GM and Chrysler can be saved from complete dissolution only by a government effort to reconcile management, workers and creditors to a much-diminished future. If Rattner and Bloom can find common ground, perhaps those dueling interests...
...Whatever their goals, the two men are well positioned to restructure the auto industry. Rattner can tell management and bondholders what they have to live with. Over the course of the past three months, he has come to believe that the bondholders, who have thus far balked at taking GM stock for much of their debt, made a bad investment and should lose all their money, says one person familiar with the President's auto task force. Rattner also took the point in ousting GM chief Rick Wagoner over the weekend. Bloom, for his part, has taken...
...credit the odd couple for playing tough with all sides, Rattner and Bloom's initial efforts are meeting with only moderate success. The stock market reacted negatively to the government's plan on Monday, with the S&P 500 dropping nearly 3.5% on fears that bankruptcy was inevitable for GM and Chrysler - a fear that the Administration did little to calm. President Obama, in his speech announcing the deal on Monday, tried to put a good face on things, laying out measures to save the companies, soften the blow to autoworkers and encourage auto sales with guaranteed warranties...
...real test of Rattner and Bloom's collaboration is upcoming. Obama, in putting new conditions on any more billions being handed to Detroit, gave Chrysler 30 days to strike a partnership with Fiat and GM 60 days to avoid bankruptcy court. Rattner will have to browbeat intransigent bondholders. Bloom will have to force major benefit cuts on the unions. And both will have to sell management on a radical reordering of their companies, one in which both capital and labor take a serious hit in order to keep the machine running...