They were allowed to do that and went bankrupt. Duh.


yes it will increase the number of reasons. Whats wrong? even when they have one less reason, they are demanding for bail out. if that reason for loss is added, they will not even be in position to demand a bail out again.
Anyways, the reason you mentioned is right. but it is not the direct reason.

Why did they kept making hummers and worthless luxurious cars with least efficiency?

Bad management? Union system? That can be said as actual REASON.

Why did not Toyota or Honda failed in US?

You know who much subsidies and help the trio (GM ford and chryslers) already getting from Government? You know some years ago US government gave a huge impetus to GM and chryslers to make them spend more in producing fuel efficient and even electric run cars?
Why didn't they tried that? Although even without any stimulus any subsidy any help from government, Toyota and Honda did exactly the same.

Why?

Bad management? wrong ethics? A sense of security that no matters what we do, government is helping us now and will help us later?

the Companies knew they had to downsizecars, why they waited, i have no clue

Not only the companies knew it, Companies were taking stimulus, subsidies and monetary help from Government from time to time too.
While the rivals of these companies were not getting any help any subsidy from government. yet they succeeded and FORD, CHRYSLERS and GM failed.

Anyways, it is the time of Obama to commit mistakes.

Judging from past behavior, I think GM would have used most of the profits and governmental support it gets, if not all of that cash to waste on more SUVs, more failed lobbying for stupid government policies, etc. And I do feel it will keep doing so. because even now, GM/Fords lobbying and SUVs is actually making them dream of a better future with better bail out!