A quick, negotiated bankruptcy is the most likely way for General Motors ( GM) to restructure and become a competitive automaker, President Barack Obama believes, according to a published report.

The president also is prepared to let Chrysler go bankrupt and be sold off piece by piece if the automaker can't form an alliance with Italy's Fiat, Bloomberg reports, citing members of Congress who were briefed on the GM and Chrysler situation.

GM has been given 60 days to fix its debt-ridden balance sheet, cut billions in costs and take other steps to transform itself into a profitable entity.

Chrysler must make the same cuts as GM, and sign up Fiat as a partner, all in 30 days.

The "quick and surgical" bankruptcy for GM that the Obama administration said was an option appears to be inevitable, said the members of Congress and two other people familiar with the matter, Bloomberg reports. Obama personally signed off on asking GM CEO Rick Wagoner to step down, Bloomberg reports.

A White House official said Obama's position hasn't changed. "He remains committed to a significant restructuring without a bankruptcy if at all possible," the official said, according to Bloomberg.

Reuters also reports Obama's thinking on the crisis facing GM hasn't changed since Monday.

"Nothing has changed on this," a senior administration official said when asked about the Bloomberg report, according to Reuters. "This report is not accurate."

"Our focus is on accelerating the speed of our operational restructuring and reducing liabilities and debt on the balance sheet," GM spokeswoman Renee Rashid-Merem said in an e-mail to Bloomberg. "GM will take whatever steps are necessary to successfully restructure our company."

Reuters, meanwhile, reports a possible bankruptcy plan being discussed for General Motors includes quickly forming a new company of the automaker's most profitable parts, while a group of other units would remain under bankruptcy protection for a longer period.
Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

If you liked this article you might like

Irma and Harvey Busted Algos; Probably Done Deals Under Trump: Best of Cramer

Your Guide to Making a Lot of Money on the Driverless Car Boom

How to Live Just Like Billionaire Warren Buffett