Obama hammers GM; Chrysler, Fiat deal takes shape

WASHINGTON -- Obama said his auto task force does not believe the plans GM and Chrysler delivered in February can result in viable companies and that he is giving them more time, along with an aggressive set of conditions.

"Our auto industry is not moving in the right direction fast enough to succeed," Obama said in remarks at the White House. He said it will require "hard choices" and "painful concessions" by companies, unions, workers and creditors in order to meet requirements for government help.

GM and Chrysler are operating on a combined $17.4 billion in government loans approved by the Bush administration in December. They had until March 31 to prove they were viable to qualify for more loans. The two automakers have asked for another $21.6 billion.

The president's auto task force said Chrysler needs to partner with the Italian car company Fiat, which has "committed to building new fuel-efficient cars and engines right here in the United States," Obama said in a speech at the White House.

"Fiat is prepared to transfer its cutting-edge technology to Chrysler," he said.

He gave Fiat and Chrysler 30 days to reach an agreement and said the government will provide Chrysler with "adequate capital" to operate in the meantime.

Later, on Chrysler's website, Chairman and CEO Bob Nardelli said Chrysler and its parent, Cerberus Capital, have "reached agreement on the framework of a global alliance" with Fiat.

Obama spoke as GM Chairman Rick Wagoner resigned at the behest of the White House. Obama said the decision is not "a condemnation" of Wagoner, but rather "a recognition that it will take a new vision and new direction to create the GM of the future."

Wagoner said in a written statement that administration officials asked that he "step aside."

Michigan Governor Jennifer Granholm said Wagoner "clearly is a sacrificial lamb" who stepped aside "for the future of the company and for the future of jobs." She spoke on NBC's Today show Monday.