CNBC Autos Task Force Rejects GM, Chrysler Plans

The Obama administration autos task force Monday rejected the turnaround plans of General Motors and Chrysler LLC and warned both could be put through bankruptcy to slash debts.

The announcement by the White House autos panel headed by former investment banker Steve Rattner marked a stunning reversal for management at both automakers and for GM investors and creditors who had bet on a softer line.

"We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested," said a senior administration official, who asked not to be named.

U.S. stock futures extended losses and U.S. Treasury futures climbed after the announcement was made. The news spurred selling of stocks across Asian markets as investors shed riskier assets, cutting short a two-week rally.

Futures on the S&P 500 were down 1.7 percent on the day, or 13.9 points, from Friday's close. Treasury 10-year futures extended gains to climb 14/32, while higher-yielding currencies fell against the yen.

GM CEO Rick Wagoner, who met on Friday with the task force, was forced out on Sunday at the request of Rattner, an official said. U.S. officials said plans were also underway to replace most of GM's directors in the coming months.

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants. more...