By Joseph J. Schatz, CQ Staff

Hours after forcing embattled General Motors Corp. chief executive G. Richard Wagoner to resign, the Obama administration said it would condition further aid for GM on significant changes to its business plan, and said it would only consider further support for Chrysler LLC if it successfully merges with Italian automaker Fiat.

Calling the restructuring plans submitted last month by the two U.S. automakers inadequate, the tough new White House auto plan raised the prospect of a “structured bankruptcy” — an option pushed by many congressional conservatives, and once touted by Senate Banking Chairman Christopher J. Dodd , D-Conn. — as a viable option for both firms.

“Their best chance at success may well require utilizing the bankruptcy code in a quick and surgical way,” a report from the White House auto task force said Monday morning, adding that a structured bankruptcy could help both firms “clear away old liabilities so they can get on a path to success while they keep making cars and providing jobs in our economy.”

The government will guarantee warranties on vehicles purchases from either automaker in an effort to maintain consumer confidence. Obama said the administration would also work with lawmakers to “provide a generous credit to consumers” who trade in older cars for more fuel-efficient models.

“I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting today,” he said, referring to the economic stimulus law (PL 111-5) enacted in February.

The White House announcement was sure to be controversial in some quarters on Capitol Hill, especially with lawmakers from states with a heavy automaker presence — particularly given the recent furor over bailed-out American International Group Inc.’s decision to hand out millions in bonuses.

The move to oust Wagoner drew early criticism from a Michigan Republican, Rep. Thaddeus McCotter , who said that GM was being treated different than banks bailed out by the government. “Mr. Wagoner has been asked to resign as a political offering despite his having led GM’s painful restructuring to date. Mr. Wagoner has honorably resigned for the sake of his company’s working families,” McCotter said in a statement. “When will the Wall Street CEO’s receiving TARP funds summon the honor to resign? Will this White House ever bother to raise the issue? I doubt it.”

Following the Bush administration’s decision to provide the two companies $17 billion to stay afloat in December, GM and Chrysler have asked the Obama administration for an additional $21.6 billion in aid. Most of that first installment of aid has been exhausted.

But the White House made it clear that any additional aid will come at a steep cost. It said it would only extend GM working capital for an additional 60 days as it comes up with a “more aggressive” plan to overhaul its operations, and officially announced the departure of Wagoner, who was blasted by lawmakers in his appearances on Capitol Hill late last week.

Saying that Chrysler “is not viable as a stand-alone company,” the administration said it would extend the company working capital for 30 days as it works to conclude a deal with Fiat. Only if that deal is successful would the White House consider the additional $6 billion requested by Chrysler. Moreover, Chrysler would have to force additional cost-saving concessions from the United Auto Workers.

The companies are supposed to contribute to United Auto Workers trust fund to cover the cost of retirees’ health care, and under terms of the government’s first round of assistance to GM and Chrysler, the companies want the union to accept stock in exchange for half of those payments.

Ford Motor Co., which secured lines of credit before the financial crisis, has not requested bailout money.

GM and Chrysler employ some 140,000 workers in the United States. The companies have until Tuesday to submit restructuring plans to the government but are not expected to meet that deadline.