GM is Risky Business for Obama

Though it had been expected for weeks, Monday's bankruptcy filing by General Motors, for decades the world's largest automaker, was stunning. Chrysler, which is emerging from bankruptcy, had been through the bailout and merger processes before, but GM had always been a symbol of American industrial might. Now, the nation is embarked on what will hopefully be a brief experiment in government control of a giant auto company.

Although the U.S. Treasury owns 60 percent of the firm's stock, President Barack Obama said Monday the government is a "reluctant shareholder" with a plan to help GM "back on its feet, take a hands-off approach and get out quickly."

He repeated his vow that he has no interest in running an auto company.

That is the only way GM can succeed and the government can limit its $50 billion investment in a slimmer, revitalized firm.

The bankruptcy process envisions splitting GM into two entities, with what the president termed the "new" GM emerging in as little as 60 to 90 days with a less debt-laden balance sheet.

We hope this scenario works out. But, as with Chrysler's merger with Fiat, there are complications.

In Chrysler's case, it remains to be seen whether there will be a good fit with Fiat. Its previous marriage to Germany's Daimler didn't work out. We can only wish Chrysler and its employees well as the firm embarks on this new venture.

While the president promised deference to GM's private-sector managers and directors in such areas as new car development, the administration has already handed the firm a difficult chore with its acceleration of fuel economy regulations, which mandate 39 miles per gallon for passenger cars by 2016.

This is expected to cost additional billions.

To achieve this goal, GM and its rivals will have to not only produce, but also sell, many more small cars. Without a steep hike in gasoline taxes or prices, this is a tall order.

As eyes are focused on GM's bankruptcy and Chrysler's new relationship with Fiat, Ford, which has avoided the need for government aid or a bankruptcy, must compete on an uneven field. It has leveraged itself to obtain operating cash, but will need more.

It still must raise capital in the private market, however. That may prove difficult considering the harsh treatment of the other two firms' bondholders.

Fairness to Ford and other privately owned automakers requires that the government sell its stake in GM to private shareholders as soon as possible.

With a controlling stake in what is still the nation's largest automaker, will Congress be able to stay out of product development and product import decisions?

We hope so. The president was right to stress the importance of GM to the nation. As he said, "it's not just any company we're talking about — it's GM."

Now he has to make good on his pledge to help it to its feet and get out.

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