Auto team may add conditions

WASHINGTON -- The auto task force reviewing the viability plans of General Motors Corp. and Chrysler LLC is likely to attach new conditions on the automakers as part of the additional aid they are seeking, U.S. Sen. Carl Levin said Wednesday.

Also, President Obama's task force may not finalize its recommendations for the companies until Tuesday's deadline, though it had been reported a decision could come by the end of this week.

"We have an indication it's going to be within the next week," Levin, D-Detroit, said.

The automakers, as part of receiving $17.4 billion in government loans, are to show by March 31 that they have a plan that will make them viable. GM and Chrysler have sought $21.6 billion in additional aid and those requests could come with new strings.

Levin said he expects the task force to make more aid available to the companies, if they take specific new steps beyond what's already been outlined toward restructuring.

"I think it's clear there will be more support, and there will be some conditionality to it," he said, without providing details about the conditions.

The administration's top auto task force adviser, Steve Rattner, said last week that the two may need "considerably more" than what they've already received. Rattner also has said that bankruptcy is not the administration's goal, but the government has pointedly not ruled out that option.

But both automakers have backed away from statements in February that they needed billions more by March 31 to avoid bankruptcy.

President Obama's auto task force plans to lay out some initial assessments of the automakers' likely fortunes soon, and may set deadlines for further progress and outline conditions for additional assistance. The task force may also signal whether it is seriously considering approving a deal to sell 35 percent of Chrysler to Italian automaker Fiat SpA in a noncash deal. The task force met with Chrysler and Fiat to discuss the proposed tie-up on Wednesday.

Levin said advisers to the task force have not briefed him on their recommendations, and he expects "a last shot" at them before they announce their findings.

He echoed Rattner's statements from Friday that GM bondholders need to reach a deal with the company on restructuring their debt, which is one of the conditions for GM getting aid.

"I think they ought to take Rattner seriously," Levin said. "I think the bondholders recognize what the alternatives are: It's that they either take a haircut, or they take a bath. ... I hope they choose the haircut."

A committee representing many of GM's bondholders fired back Wednesday, saying they were being asked to sacrifice more than other stakeholders, including the United Auto Workers union.

"Bondholders and their representatives have said time and again that they want to play a constructive role in GM's restructuring and are open to new proposals and renewed negotiations," said a person familiar with the bondholders' meetings. "In the end, we all lose -- the American taxpayers, the unions and the bondholders -- if GM fails to emerge a viable, and ultimately profitable, company."

Chrysler's chief financial officer Ron Kolka told The Detroit News last week that the U.S. Treasury Department is taking part in the negotiations with Chrysler's bank creditors.

Because of the timing required to finalize deals with debt holders and others, GM and Chrysler won't be able to meet the requirements set out in the loan agreements but Obama Administration officials have said they will not seek a return of the loans on March 31, which would force them into bankruptcy.

Reach David Shepardson at dshepardson@detnews.com">dshepardson@detnews.com.