White House hopes Chrysler avoids bankruptcy

/ Source: The Associated Press

White House economic adviser Larry Summers said Sunday the Obama administration is holding out hope that Chrysler LLP can stay out of bankruptcy court.

Chrysler LLC is surviving on government loans and has until Thursday to work out a joint venture with Italian automaker Fiat Group SpA.

"We will certainly do our part to support a successful negotiation, but on the other hand, the president has made clear — and I think most Americans would share this view — that you've got to have responsibility, you've got to have accountability and you can't have a situation where companies precede on permanent basis relying only on cash from the government," Summers said.

"That's why he made clear that there needed to be a new structure which Chrysler could operate, which would make long-term liability possible."

Summers would not predict whether Chrysler would have to file bankruptcy or how damaging it would be to the economy if the automaker did. In certain cases, a bankruptcy is not about liquidation at all, but about a change in a company's legal form that actually protects the company and enables it to function more effectively going forward.

"We're hopeful that the negotiations, which have preceding with great energy, are going to conclude successfully," Summers said. "You never know — with any negotiation — until the very end. There are some issues that have been worked out. There are some issues that remain to be worked out, but it's in everybody's interest to see these negotiations succeed and we're hopeful that they will."

He appeared on "Fox News Sunday."