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White House: No Doubt US Needs Strong Auto Sector

March 05, 2009: 04:16 PM ET

WASHINGTON

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"I don't think it comes as a big surprise to many that the auto industry is in crisis," White House spokesman Robert Gibbs said. "If you look at the plans that were submitted recently by GM and Chrysler - and certainly if you look at last month's auto sales - you understand the level and the depth of the crisis that the auto industry is in."

Earlier Thursday, GM's auditors said its continuing losses, negative net worth and inability to generate cash for continued operations across its global operations raise substantial doubt that it can remain a going concern.

The warning, included in GM's delayed 10-K filing with the Securities and Exchange Commission, forced the company to seek waivers from lenders. It comes amid continuing talks between the company's bondholders about converting $16 billion of GM debt into equity, and as the administration evaluates the company's recently completed viability plan.

It remains unclear if the company will be able to receive more government cash.

The White House's budget request last week included a $250 billion placeholder for potential bailouts, an amount that could allow the government to purchase $ 750 billion in troubled assets.

Though the White House doesn't currently have plans to use the funds, Gibbs repeated that more government money is likely to be needed to help weather the recession.

"You know, the team continues to assess what's out there on any number of industries and make decisions in conjunction with the president," Gibbs said. " But I don't think there's any doubt we need a strong auto industry in this country."

LINK:White House: No Doubt US Needs Strong Auto Sector
 
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