WASHINGTON (Reuters) - General Motors’ bondholders need to make sacrifices to lay the groundwork for a restructuring of the company that would avoid bankruptcy, a senior White House adviser said on Tuesday.
“We’ve been facing this dynamic with the bondholders in which they’ve been holding out on some things on the presumption that, well, maybe the government will just keep bailing us out whenever we run out of money,” Austan Goolsbee, a member of the White House Council of Economic Advisers, told CNBC television. “That’s just not going to happen. They’re going to have to make some sacrifices.”
“If they’re wanting to play chicken that seems like a bad idea,” said Goolsbee, a member of the administration’s taskforce on auto restructuring.
Obama on Monday ordered GM and Chrysler to redouble efforts to ensure their survival and access more funding and warned the alternative could be bankruptcy.
The administration also forced out GM CEO Rick Wagoner, raising the prospect it may also take a firmer hand with the chief executives of banks receiving government bailout funds.
Asked whether bank CEOs might be next, Goolsbee said it was natural at times when pushing a company through a deep restructuring to find new management.
“You have seen leadership changes at Fannie Mae, at Freddie Mac, at AIG, and it’s simply a case that when you have fundamental restructurings and a total change of direction, you know, a lot of times it’s time for the management to change,” he said.
Reporting by Tim Ahmann; Editing by James Dalgleish