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Obama Team Scraps Auto Bailout

The Obama administration auto task force has sent both GM and Chrysler back to the drawing board, turning down requests for additional loans until the companies come up with more realistic restructuring plans. The government will prop up GM for two months while the automaker tries again. Chrysler has 30 days.

Earlier, the administration forced GM chief Rick Wagoner to resign.

Reuters:

The Obama administration autos task force on Monday rejected the turnaround plans of General Motors Corp (GM.N) and Chrysler LLC and warned both could be put through bankruptcy to slash debts.

The announcement by the White House autos panel headed by former investment banker Steve Rattner marked a stunning reversal for management at both automakers and for GM investors and creditors who had bet on a softer line.

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