Shares of GM drop after government says bankruptcy may be needed President Barack Obama said Monday his administration won't let the struggling U.S. auto industry "simply vanish" but held out bankruptcy as an option to force restructuring at ailing giants General Motors Corp. and Chrysler LLC. Obama called restructuring plans submitted by both auto companies inadequate and said both are getting more time to come up with new plans for viability. "We cannot, we must not, and we will not let our auto industry simply vanish," Obama said at the White House Monday morning. He said his administration will offer GM and Chrysler a limited period of time to work with creditors, unions, and other stakeholders to restructure in a way that would justify them getting more U.S. taxpayer money. Shares of General Motors fell almost 30% earlier on Monday after the White House ousted the auto maker's chief executive, Rick Wagoner. The government ordered GM rival Chrysler LLC to form an alliance with Italian car giant Fiat as a condition for receiving more government aid. Obama said Chrysler and Fiat have 30 days to present a plan. If their agreement passes muster, the U.S. will consider lending the companies as much as $6 billion, he said. 'No interest' in running GM Obama said the U.S. has "no interest" or intention of running General Motors. He is giving the company 60 days' worth of capital and said his administration will work with GM "to produce a better business plan." "I'm confident that GM can rise again, provided that it undergoes a fundamental restructuring," Obama said. Standard & Poors said its ratings on both GM and Chrysler remained unchanged after Obama's announcement. But the ratings agency said the risk of bankruptcy remains high for both companies. "This is because of highly uncertain consumer demand and other serious risks, including persistently weak credit markets and potential auto supplier failures," the ratings agency said in a statement. Democratic lawmakers praised Obama's announcement. "We will not give these companies a blank check," said Senate Majority Leader Harry Reid of Nevada. "If these companies do not develop strong plans to remain viable in the long term, they will lose our support," he said in a statement. Long struggle The two car makers have been struggling for years against a rising tide of foreign competition and high costs. They have received billions of dollars in government support already. Their focus on trucks and sport utility vehicles in recent years was another burden as the price of gas skyrocketed and demand for smaller, fuel efficient cars rose. Once the economy soured, the companies were unable to stay afloat without taxpayer funded bailouts. GM Chief Operating Officer Frederick "Fritz" Henderson will serve as CEO until a permanent replacement is found and longtime director Kent Kresa will serve as interim chairman. The company is likely to see most of its board of directors replaced. Henderson said Monday that GM has a "strong preference" to avoid bankruptcy but that the company will take "whatever steps" are necessary to restructure the company. "We have significant challenges ahead of us, and a very tight timeline," Henderson said in a statement. "I am confident that the GM team will succeed, and that a stronger, healthier GM will play an important role in revitalizing America's economy and re-establishing its technology leadership and energy independence." Exit Wagoner Wagoner said in an earlier statement that he had a meeting with administration officials on Friday. "In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have," Wagoner said. Rep. Sander Levin, a Michigan Democrat, said the government should make credit available and that creditors must take their losses on the companies. "If not this result will occur through a bankruptcy proceeding that could also have unforeseen consequences for all involved," said Levin in a statement on Monday. GM already has received about $13.4 billion in Treasury loans and said in February it needs up to $16.4 billion in additional aid. Separately, Dow Jones Newswires and The Wall Street Journal said that Chrysler LLC Chief Executive Robert Nardelli is unlikely to meet the same fate as Wagoner.

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