Following the announcement that Rick Wagoner stepped down as Chairman and CEO of General Motors, President Obama declared today that the restructuring plans “submitted by GM and Chrysler … did not establish a credible path to viability. In their current form, they are not sufficient to justify a substantial new investment of taxpayer resources.”

In addition, “the Administration has reluctantly concluded that Chrysler is not viable as a stand-alone company.” A merger with Fiat, however, could provide a viable future for Chrysler, Obama said. He gave Chrysler 30 days to finalize the deal with Fiat. In the meantime, the government will provide $6 billion to cover Chrysler’s day-to-day operations.

Regarding GM, he said he “is confident that with a more fundamental restructuring, GM will emerge from this process as a stronger more competitive business.” He gave GM 60 days to submit a more aggressive restructuring plan.

The Administration has not ruled out bankruptcy for the two automakers, however. Both companies, Obama said, “have unsustainable liabilities and both need a fresh start. Their best chance at success may well require utilizing the bankruptcy code in a quick and surgical way. A structured bankruptcy process – if needed here – would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success while they keep making cars and providing jobs in our economy.”

Obama named Edward Montgomery as a new Director of Auto Recovery to aid communities hard hit by the “carpocalypse,” and direct existing recovery funding to those communities.

Meanwhile, for consumers, he announced that the government will guarantee warranties on Chrysler and GM cars, in an effort to stave off further deterioration in their sales. (See "Car buyers hesitant to buy from bankrupt automakers.")

—Eric Evarts

Read “U.S. government to back Chrysler, GM car warranties” and "Detroit Report Cards."