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Obama Pushes Out General Motors Chief

From a joyous New York Times:

U.S. Lays Down Terms for Auto Bailout


WASHINGTON — The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out — a level of government involvement in business perhaps not seen since the Great Depression.

President Obama is scheduled to announce details of the auto package at the White House on Monday, but two senior officials, offering a preview on condition of anonymity, made clear that some form of bankruptcy — a quick, court-supervised restructuring, as they described it — could still be an option for one or both companies.

Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.

The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health-care obligations.

If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.

G.M., on the other hand, has made considerable progress in developing new energy-efficient cars and could survive if it can cut costs sharply, the task force reported. The administration is giving G.M. 60 days to present a cost-cutting plan and will provide taxpayer assistance to keep it afloat during that time.

Along with Mr. Wagoner’s ouster, the task force said most of the company’s board would be replaced over the next few months. In a statement Monday, Mr. Wagoner said he had been urged to “step aside” by administration officials, “and so I have.”

His resignation is the latest example of the government taking a hands-on role in making major decisions at companies it is bailing out. The government has already pushed banks to make management changes and sharply reduce or eliminate their dividends, and it also is directing many of the decisions at the troubled insurance giant American International Group, which is nearly 80 percent owned by the government after its rescue.

In deciding to urge Mr. Wagoner to step down, the Obama administration seemed mindful of the public’s growing outrage over bailouts of private companies, as well as the bonuses paid to employees of A.I.G.

Mr. Obama is well aware that he cannot afford to give the appearance of using tax dollars to reward executives who have done a poor job, and he began signaling as early as last week that he would take a tough stance with the automakers.

In a question and answer session at the White House on Thursday, the president said there had been “a lot of mismanagement of the auto industry over the past several years,” and declared that more government help would be contingent on the companies’ “willingness to make some pretty drastic changes.” …

As part of the companies’ original agreement for the loans, both were required to submit restructuring plans. Mr. Wagoner’s removal underscores how much more G.M. needs to cut than was proposed in the plan the company submitted.

Administration officials stressed that the company needed a fresh approach and leadership changes; they said Steven Rattner, the former investment banker who co-chairs the auto task force, delivered the news to Mr. Wagoner…

Mr. Wagoner, 56, came to G.M. in 1977 and rose to become chief financial officer in 1992 when he was 38. He oversaw the company’s North American business for years before being named chairman in 2000…

The administration briefed lawmakers on the plan Sunday night. Afterward, Representative Thaddeus G. McCotter, Republican of Michigan, whose district is just outside Detroit, expressed frustration over the ousting of Mr. Wagoner and with administration officials for not being clearer about the potential job losses that lie ahead.

Why would you ask Rick Wagoner to resign when you are giving G.M. 60 days to meet a new target, but you aren’t saying what the new goal is yet,” Mr. McCotter said in an interview.

The big surprise is that Mr. Obama has not yet announced Michael Moore as the new head of General Motors.

Of course he might as well have.

His and Moore’s policies are identical. As is their knowledge about the auto industry.

“Why would you ask Rick Wagoner to resign when you are giving G.M. 60 days to meet a new target, but you aren’t saying what the new goal is yet” …

What a good question.

This article was posted by Steve on Monday, March 30th, 2009. Comments are currently closed.

12 Responses to “Obama Pushes Out General Motors Chief”

  1. bousquem says:

    He is just looking for GM and the others to fail miserably. You toss out anyone who knew the company so you have new people and give them a goal to accomplish in a short period of time, and you fail to actually tell them the goal till its too late. Then all that needs to be done is nationalize the companies becuase they will be “too big to fail” or some other line. The goverment should have absolutely no control over the companies. Can the CEO be removed by the goverment, yes but only if they have done something like kill someone or are a drug dealer, not just because the administration doesn’t like them and wants their own toady in control, ala puppet CEO.

  2. Howard Roark says:

    Orwellian doublespeak:
    BARRY SAYS: “we have no intention in running GM”
    BARRY DOES: fires GM chief

  3. Reality Bytes says:

    As a nod & a thank you to Mr. Wagoner, had it not him askin’ the Corvette team “What could you build for a hundred thousand?” I give you what Car & Driver, Automobile & Motortrend all agree is the number one super car (sorry Colonel), The Chevy Corvette ZR1. 0-60 in 3.3 top – speed 205 – mpg highway 20+.


    Turn your speakers up for this one!


    So Cool Itz Sick!!!

    Imagine what they could do without Washington & the unions stepping on their necks! Reminds me of the Good Fellas scene when they burned down the guys restaurant after they bled it dry.

    • Colonel1961 says:

      No problem. It is a beautiful vehicle, indeed.

      p.s. the Good Fellas analogy is spot-on. ‘Ya light a match.’ Too bad…

    • Reality Bytes says:

      Plus a tune up won’t cost you 14K like your Ferrari. Then again, just the sound of a 599 makes me woozy. I hear the Italians are the machinists in Heaven. Thank God they’re not the bankers.

    • Colonel1961 says:

      My wife and I have always loved cars – never beholden to any country or company. She had Corvette ads on her walls as a teenager (yeah, pretty cool for chick – lol) and we both love the lines of the early sixties models, then the Sting Rays, and even today, with the current incarnation of ‘Vettes (sorry, don’t know the proper Corvette taxonomy). But the shame is that a great car company has been hosed on all sides. Apathetic management, lackadaisical workers, atrocious designs (at times) and a cost of ownership (purchase, maintenance, repair, insane depreciation, et cetera) that cannot be justified. Sad. It truly hurts.

    • Reality Bytes says:

      Cars from RB’s Dream Garage

      ’64 Caddy Coupe or Convert (on a custom tube frame w/ LS3 motor & 6 speed manual & ’96 Impala ss suspension please)

      ’65 Sunbeam Tiger (blown thanks)

      ’60 Buick Invicta convertible

      Ferrari GTO (any mid 90’s)

      Porsche 928S

      68 Jag XKE Coupe w/ 12 holes

      Mercedes SEL Hammer

      ’67 Olds 442 Convertible or ’68 W30 442

      ’65 Chevy Corvair convertible turbocharged

      ’67 Caddy Eldorado (bone stock & gotta be black)

      ’65 Buick Riviera (slammed, shaved & chopped just a little, custom interior & lathered in midnight blue)

      Oh & RB cardinal rule no. 1 – NEVER EVER HANG 20 INCH PIMP ROLLERS ON A CLASSIC!).

      Alas, with the kid in college, only my Ashton is paid for while thumbing through pages of such wonders of the modern age.

  4. pdsand says:

    The canned outrage is starting, from CNN:

    “GM’s ousted CEO eligible for $20M retirement package

    (CNN) — General Motors’ outgoing chief executive Rick Wagoner is eligible to receive more than $20 million in his retirement package, according to a filing with the Securities and Exchange Commission.

    Wagoner announced Monday he was resigning at the request of the Obama administration, which has prodded GM to restructure as the company receives government financing to stay afloat.

    Although Wagoner is not eligible for any severance pay upon leaving GM, he is eligible for hefty retirement benefits.

    “He has worked for GM for nearly 32 years, and he would be entitled to certain vested awards, deferred compensation, and pension and other post-retirement benefits,” GM said in a statement.

    Upon Wagoner’s departure he will be eligible for both a salaried retirement plan and an executive retirement plan, which at the end of last year totaled approximately $20.2 million, GM spokeswoman Julie Gibson said.”


    I’m sure that Obama, who has no interest in running GM, will have plenty to say about this. And probably just as much to say about the setting of the incoming CEO’s compensation.

  5. Petronius says:

    If you are going to sup with the devil, remember to bring a long spoon.

  6. U NO HOO says:

    Tax the pension 90%!

    • Colonel1961 says:

      U NO HOO: Your job application for congress is approved!

      I’ll take odds that some (dang it, no more vulgar language) ding-a-ling proposes that very thing tomorrow…

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