After months of hand-wringing, bailouts and backlash, new GM CEO Fritz Henderson says bankruptcy is still a very real possibility:

The company, he said, has until June 1 to accomplish changes sought by the government, or it will be in bankruptcy. The 60-day deadline should be enough time, but if it becomes evident that the changes can’t be made by the deadline, GM could go into court sooner, he said.

“It doesn’t have to take 60 days. If it’s quite clear that we’re not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment” reviewed by the Obama administration’s autos task force, he said.

Hopefully GM can find a way out of its tailspin, but the company is clearly worried they won’t be able to meet the new guidelines laid out by the Obama administration. Arguably, we should have worked with GM to find a bankruptcy solution months ago, rather than kicking the problem down the road.

By delaying what may be inevitable, we’ve left both GM and the government in awkward positions. The situation should have never gotten to the point where the President of the United States can force the resignation of the CEO of a publically held corporation. While the cries of “socialism” are hyperbolic at best, no one should be happy with the way the government has handled GM.

Perhaps GM can still avoid bankruptcy and the government bailout and meddling will prove to have been a distasteful but necessary step in saving one of America’s key industries. But I can’t help but think that, once again, we allowed a sky-is-falling mentality to prevent us from developing a solution that addressed the core problem.

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