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Obama: Chrysler will seek bankruptcy

U.S. President Barack Obama discusses the plans for Chrysler to file for Chapter 11 bankruptcy in the Grand Foyer of the White House in Washington on April 30, 2009. Behind Obama are members of his auto task force including Treasury Secretary Timothy Geithner (L). (UPI Photo/Roger L. Wollenberg)
1 of 7 | U.S. President Barack Obama discusses the plans for Chrysler to file for Chapter 11 bankruptcy in the Grand Foyer of the White House in Washington on April 30, 2009. Behind Obama are members of his auto task force including Treasury Secretary Timothy Geithner (L). (UPI Photo/Roger L. Wollenberg) | License Photo

DETROIT, April 30 (UPI) -- Chrysler LLC will seek bankruptcy, becoming eligible for more federal aid and a partnership with Italian automaker Fiat, U.S. President Obama said Thursday.

When announcing the events surrounding the ailing American automaker, Obama lashed out at a small group of hedge funds he said did not want to sacrifice as much other stakeholders and union members.

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"I don't stand with them," Obama said.

Obama said Chrysler's Chapter 11 bankruptcy would be quick and efficient because of agreements already reached and is "designed to deal with last few holdouts."

To those who think bankruptcy is a step Chrysler should not take, Obama said, "(It) was unsustainable to let enormous liabilities remain on Chrysler's books, and it was unacceptable to let a small group of speculators endanger Chrysler's future by refusing to sacrifice like everyone else."

Obama said the Chrysler-Fiat partnership would save jobs and facilities in the United States and Canada.

Before Fiat takes majority ownership, however "every dime of taxpayer money will be repaid," Obama said.

U.S. consumers can buy that brand with confidence, knowing warranties are backed by the federal government, Obama said. Also, GMAC agreed to take on financial servicing of new Chrysler loans.

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The administration last month gave Chrysler 30 days to reformulate its reorganization plan, saying the federal government determined "we simply cannot keep this company ... afloat on an endless supply of taxpayer dollars," Obama said.

The federal auto task force will continue its work with General Motors Corp. as it strengthens its business plan and moves toward restructuring.

"We have made great progress. We can make great American cars. Chrysler and GM are going to come back," Obama said.

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