SELL YOUR CAR
Advertise your car for free and reach a large audience
of interested buyers.
Receive emails and phone calls from interested buyers.
Email Alert
Receive instant notification for used cars that match your need.
Click here for alerts.
Addressing the challenges in the auto industry
Addressing the challenges in the auto industry requires us to balance these two responsibilities. If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers.
Under ordinary economic circumstances, I would say this is the price that failed companies must pay. And I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances.
Some argue the wisest path is to allow the auto companies to reorganize through Chapter 11 provisions of our bankruptcy laws and provide federal loans to keep them operating while they try to restructure under the supervision of a bankruptcy court.
But given the current state of the auto industry and the economy, Chapter 11 is unlikely to work for American automakers at this time. American consumers understand why. If you hear that a car company is suddenly going into bankruptcy, you worry that parts and servicing will not be available and you question the value of your warranty.
With consumers hesitant to buy new cars from struggling automakers, it would be more difficult for auto companies to recover. Additionally, the financial crisis brought the auto companies to the brink of bankruptcy much faster than they could have anticipated. And they have not made the legal and financial preparations necessary to carry out an orderly bankruptcy proceeding that could lead to a successful restructuring.
The convergence of these factors means there is too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession.
This legislation earned bipartisan support from majorities in both houses of Congress. Unfortunately, despite extensive debate and agreement that we should prevent disorderly bankruptcies in the American auto industry, Congress was unable to get a bill to my desk before adjourning this year.
