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Fiat CEO Marchionne's Chrysler Rescue Offer

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WASHINGTON — The Obama administration's auto industry task force met Thursday with representatives of General Motors' bondholders and the chief executive of Fiat Group SpA, who said the Italian automaker could revive the fortunes of Chrysler LLC.

The panel held lengthy meetings with executives and lawyers for two important parts of the proposed turnaround plans for General Motors Corp. and Chrysler. Those companies are surviving on $17.4 billion in government loans and seeking billions more to stay afloat.

White House spokesman Robert Gibbs said the team had been meeting "round the clock to come up with a solution to this crisis."

"There's no doubt that all the stakeholders involved are going to have to give in order to ensure that that restructuring takes place," Gibbs said.

Advisers to GM bondholders met with Steve Rattner and Ron Bloom, top aides to Treasury Secretary Timothy Geithner, and other members of the panel for two hours. GM is negotiating with its bondholders to cut two-thirds of its $27 billion in unsecured debt under the terms of the loan agreement with the government.

The advisers to the bondholders declined comment. They were expected to outline several options to reduce the Detroit automaker's unsecured debt and discuss whether the government would guarantee new bonds that GM would issue as part of its restructuring.

Earlier, Fiat's chief executive, Sergio Marchionne, said the task force was receptive to a proposed partnership that would give Fiat a 35 percent stake in Chrysler in exchange for new technology, but no cash.

"We can add value," Marchione said. "That's the real issue and it's a necessary ingredient of the revival of Chrysler."

Hurt by a steep decline in auto sales and past poor decisions, General Motors and Chrysler have requested an additional $21.6 billion to help them restructure. The government is trying to revamp the companies by March 31, but could call back the loans if the automakers fail to win concessions from stakeholders.

Adding to the concerns, GM's auditors said Thursday in a report there was "substantial doubt" that GM could stay in business.

Members of the task force are scheduled to meet with GM and Chrysler executives in the Detroit area on Monday and tour their facilities, said two officials familiar with the plans. They spoke on condition of anonymity because they were not authorized to discuss the plans publicly.

Chrysler contends the alliance with Fiat would help both companies. Fiat could give Chrysler a broad array of fuel-efficient small and mid-size cars, something the Auburn Hills, Mich.-based company lacks, and provide Chrysler with access to foreign markets.

Fiat's Marchionne has sought a U.S. partner to bring Fiat's successful update of the 500 subcompact and its sporty Alfa Romeo brand to the United States. He said the panel "wanted to know what the industrial alliance will look like and what it will look like after we're finished."

"I think they were intelligently critical of all things that were relevant ... and rightly so. They're looking at taxpayers' funding," he said. "They recognize the magnitude of the problem and there is an absolute determination to find a solution."

Some members of Congress have questioned whether the government should save a company with a significant foreign stake in a major U.S. automaker. Marchionne said "nothing is going to be taken out of the U.S. and the main objective is to repay every single dollar of taxpayer funding before anyone gets anything."