From NBC's Athena Jones
President Obama said Chrysler's decision to merge with Italy's Fiat and file for bankruptcy would give the company "a new lease on life," and he assured its employees and communities depending on it that the company would continue to operate normally during the process.
Chrysler has borrowed some $4 billion from the government and needs more aid to keep operating. Under the new agreement, the government will provide an additional $8 billion in loans to Chrysler -- including $3.3 billion in working capital.
"Today I am pleased to announce that Chrysler and Fiat have formed a partnership that has a strong chance of success," Obama said. "It's a partnership that will save more than 30,000 jobs at Chrysler and tens of thousands of jobs at suppliers, dealers, and other businesses that rely on this company."
Members of the auto task force and key Cabinet members -- including chief economic adviser Larry Summers, Treasury Secretary Timothy Geithner, OMB Director Peter Orszag, Carol Browner, economic adviser Austan Goolsbee, Transportation Secretary Ray LaHood, Energy Secretary Steven Chu and Biden economic adviser Jared Bernstein -- joined the president at the event in Grand Foyer.
The car industry employs millions of Americans, directly and indirectly, and a collapse of any of Detroit's Big Three could have far-reaching effects on the already-weak economy. Obama has said repeatedly that his goal is an American auto industry that can compete globally and that does not require taxpayer support.
During his 12-minute remarks, the president hailed Chrysler CEO Robert Nardelli for his role in the restructuring process and praised the United Auto Workers and several of the company's biggest creditors for making "unprecedented sacrifices" to save Chrysler. Obama slammed a group of investors and hedge funds that had decided to hold out for what he called an "unjustified taxpayer-funded bailout," in some cases demanding twice the return others were getting.
"I stand with Chrysler's employees and their families and communities," Obama said. "I stand with Chrysler's management, its dealers and its suppliers. I stand with the millions of Americans who own and want to buy a Chrysler car. I don't stand with those who held out when everybody else was making sacrifices."
Under the new deal, GMAC, an independent bank holding company that finances General Motors, will finance new Chrysler sales, and the government will provide capital to GMAC to help unlock the credit market for auto loans.
The Small Business Administration will announce an expansion of some loan programs tomorrow that would help suppliers and dealers, Obama said. And he again encouraged Americans to buy an American car, reminding them that the U.S. government was backing warranties.
"Quick" bankruptcy not a sign of weakness
The president said bankruptcy was "not a sign of weakness -- but rather one more step on clearly chartered path to Chrysler's revival." He also repeated assurances he made to television viewers last night that a Chrysler bankruptcy would be short because the companies biggest stakeholders in the process had already agreed to concessions.
"This process will be quick," he said. "It will be efficient. It's designed to deal with the last few holdouts, and it will be controlled."
Still, the president has said he "would love to get the U.S. government out of the auto business as quickly as possible," and it is unclear just how the administration would go about setting the parameters for the length of any company's bankruptcy process. That will ultimately be up to the bankruptcy court judge.
GM also has received billions in taxpayer money and still has another 30 days to present its restructuring plans to the administration.