Speaking at a mid-day address, President Barack Obama on Thursday announced that U.S. carmaker Chrylser LLC has officially filed for bankruptcy, but he sought to assure the public that the company will remain strong, saying that Chrysler's partnership with Italian automaker Fiat is a go.
"If you are considering buying a car I hope it will be an American car," he said, adding that the U.S. government will back the warranties on Chrysler vehicles if necessary. "Chrysler and GM are going to come back."
Obama said the deal was enabled by the sacrifices of a broad range of stakeholders, from union officials to suppliers to major financial institutions such as JP Morgan.
The deal, he said, will save 30,000 jobs at Chrysler and tens of thousands more at its suppliers. In turn, he said, the federal government will provide the company with more loans.
Obama also took the opportunity to lambaste a small group of lenders who refused an offer of cash in lieu of their full $6.9 billion debt.
"They were hoping everybody else would make sacrifices and they would have to make none," he said. "I do not stand with them."
Partly as a result of that stumbling block, the company is filing for Chapter 11 bankruptcy. But Obama said the filing will not affect the health of the company or the jobs of its employees.
"This is not a sign of weakness, but one more step on a charted plan of Chrysler revival," he said. "This process will be quick. It will be efficient."
But he added, "I recognize the path we're taking is hard, but as is often the case, the hard path is the right one."
During his address Obama praised JP Morgan for agreeing to reduce Chrysler's debt to less than one-third of its face value.
Under the deal with Fiat, the Italian company will take on a 20 percent stake with Chrysler. Fiat will provide Chrysler with the equipment and know-how necessary to build smaller, more fuel-efficient vehicles.
Also, the duties of Chrysler Financial, the arm of the company responsible for making loans to buyers and dealers, will be taken over by GMAC Financial Services, which used to be the finance division of General Motors Corp.
