Obama to GM CEO: Hit the Bricks!

GM CEO Rick Wagoner is stepping down, apparently at the behest of President Obama…

General Motors Corp. Chairman and CEO Rick Wagonerwill step down immediately at the request of the White House, administration officials said Sunday. The news comes as President Obama prepares to unveil additional restructuring efforts designed to save the domestic auto industry.

The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce measures to restructure GM and Chrysler LLC in exchange for additional government loans. The companies have been living on $17.4 billion in government aid and have requested $21.6 billion more.

 

…this is what happens when you take someone else’s money.   By all accounts, GM should have gone bankrupt to completely clean up their cost structure (e.g. very expensive union contracts) before taking a dime of government money.   The government should have provided “DIP” (debtor in possession) financing.  The politics of the union pension plans, benefits and jobs plays out differently in Washington than it does on Wall Street, because the government doesn’t have a fiduciary duty to anyone, only to the person in power.

 

This could be the biggest mistake made yet by a president misusing government power to control business.  Like the dog that catches the car, what’s Obama going to do with GM, now that he caught it?   I’m guessing he’ll break it by installing a politically connected, incompetent board like they have at Freddie or Fanny, pumping government money in for a while to prop up the union jobs (at least another 18 months to get through the next election,null,null,null), then it will be in worse shape and they will pull the plug.

 

Don’t bet this administration will be asking for the resignation of the head of the United Autoworkers.