Obama should let GM go bankrupt, 2 GOP senators say

The automakers and their supporters in Washington have largely rejected bankruptcy, saying the companies likely would not emerge from a court-ordered reorganization, largely because customers would be reluctant to buy cars from bankrupt companies. Obama administration officials have so far refused to clearly rule out bankruptcy as an option. McCain, R-Ariz. said on 'Fox News Sunday' that the Obama needs to allow both GM and struggling Wall Street banks go into bankruptcy, calling bankruptcy the only way for the companies to restructure and rework labor and other contracts. McCain had supported some aid to the industry during his 2008 presidential campaign -- he rejected, then embraced, a $25 billion loan program for plant retooling, telling workers at GM's Warren technical center in September, 'We're not going to leave the workers here in Michigan hung out to dry while we give billions of taxpayer dollars to Wall Street.' But McCain was an ardent opponent of the Bush administration's use of the Wall Street bailout fund for loans to GM and Chrysler. Shelby, R-Ala., the top Republican on the Senate Banking Committee, has opposed auto aid from the start. Appearing on ABC's 'This Week with George Stephanopoulos,' Shelby again laid the blame for the industry's woes on the United Auto Workers. 'I've suggested they go into Chapter 11 (bankruptcy), that's where they belong,' he said of GM and Chrysler. 'Short of that, the UAW will run those companies and run them into the ground.' The Chamber of Commerce supported the original loans, but Donohue, the influential business group's president, has said he is skeptical about additional aid and has suggested bankruptcy be one possibility. On 'This Week,' he didn't clearly embrace bankruptcy, but said GM in particular 'has to be willing to be very, very tough and take the big step, if they have to. Otherwise, they're not going to get any place with their unions or be able to deal with the franchise rules in the states on the dealers.' You can reach Gordon Trowbridge at (202) 662-8738 or gtrowbridgedteom.