With General Motors shares briefly plunging to their lowest level in three-quarters of a century, it should be no surprise that President Barack Obama marked the first meeting of his administration’s new auto task force by declaring there’s a need for a fundamental restructuring of the domestic car business.
A White House statement stressed that the administration understands the urgency of dealing with the problems facing Detroit’s Big Three. The task force, chaired by Treasury Secretary Timothy Geithner and National Economic Council Director Larry Summers, aims to get a clear handle on whether the domestic industry can be saved – particularly General Motors and Chrysler, which, on Tuesday, submitted “viability” plans to support the billions in loans former Pres. George Bush approved, last December, to keep them alive.
The new plans asked for an additional $21.6 billion in aid, while outlawing significant new cuts in production and employment aimed at keeping GM and Chrysler in business. The two makers will have to complete their proposals by March 31st, after which the task force will make its recommendation to Pres. Obama. He could agree to provide additional assistance, or take steps – such as calling in the existing loans – that would force the makers to declare bankruptcy.
The latter possibility is clearly weighing on investors, who briefly drove GM stock down to a near 75-year low of $1.53 a share in early afternoon trading. The last time the company saw that number was on July 26, 1934, in the depths of the Great Depression. By the end of Friday trading, GM shares recovered slightly, to close at an anemic $1.77, still down 23 cents or 11.5%.