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Obama’s A.I.G. = Automotive Inspector General

Posted by TONY CAMPBELL, Columnist in Economy, Politics, Society.
Mar 30th, 2009 | Comments

President Obama has reportedly asked for the head of General Motors to step down before anymore taxpayer money is given to GM. It is surprising that anyone would think that President Obama would not be tough on the automotive industry. The sad thing is that almost every pundit is shocked by this policy. Obama has taken his lumps over the last four weeks for the financial collapse that he inherited from the previous administration and the Congress that he was a member of. It is no surprise to me that he is being very careful in his first direct involvement in giving out public money to a private industry that has underperformed over the past thirty years.

Simply put, President Obama has already lost political capital because of the decisions made last year. Imagine if GM was to get taxpayer money, and then pay a bonus to their CEO, the voting backlash in 2010 would make 1994 seem like a blip on the political radar. Obama is not about to risk losing his advantage in Congress over this issue. If the automotive industry wants to put its’ hand out for money, it is going to have to play the game under Obama’s terms.

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AustinRoth

I think the concern is centered around the concept of the government asking a senior executive to resign without any indication of illegal activity on their part.

DaGoat

I actually agree with Obama here. If a private company wants taxpayer's money there should be strings attached, and if his administration's review indicates Wagoner should is part of the problem then so be it - it's not like Wagoner has done a bang-up job leading GM.

Now if Obama would only demand the same level of responsibility from Congress.

elrod

Austin,
How is GM even a private company anymore if it relies on government aid to stay afloat?

Rambie

"If the automotive industry wants to put its’ hand out for money, it is going to have to play the game under Obama’s terms. "

Agreed, why give out taxpayer money to the management teams that drove the auto industry into he ground requiring them to NEED taxpayer money? This should have happened with AIG and all other other financial banks that got taxpayer money.

AustinRoth

Elrod - so, your position is federal assistance makes a company 'non-private' (although you really tipped your hand towards your socialist leanings with that comment. GM is has has not been a 'private company'. It is a public company with common stock. You seem to be saying that there are only two kinds of companies - ones already owned and controlled by the government, and ones soon to be)

My position is the Federal assistance is supposed to be a loan to be repaid, or a grant, unless specifically spelled out otherwise. If in return for said aid, the government becomes the majority stockholder, only then it is indeed the owner.

Meanwhile, a few minutes ago Obama has called for what I have believed from the beginning is the correct solution - bankruptcy protection and reorganization. Whether that requires additional Federal dollars or allows them to come out with private financing is secondary. This is what bankruptcy laws were created to allow, controlled reorganization, or a determination that it is not possible, and liquidation.

HemmD

Austin

So bankruptcy is the third kind of company? It's not that you dislike government intervention, it's just that it has to be judicial. Had the bailout money come from private sources, I take it the lenders would have no say in their investment?

Perhaps failing GM makes sense, all those union contracts just go away along with those contracts with suppliers. If a few million people get fired, at least we won't be socialists.

Clearly, Obama was attempting to keep that from happening. If he fails, he's an idiot for trying, and if he succeeded, he's a socialist. Too bad there's not another way to look at this.

ChrisWWW

AR,
If GM doesn't want the Federal government meddling with its executive staff, then GM is certainly welcome to decline government assistance.

These are extraordinary circumstances, and your charge that government assistance to GM is merely a loan is misleading. If it's not then why didn't GM crawl to any number of banks for help?

Here are some important numbers:
GM stock is currently trading at under $3, with a total market capitalization of $1.75 billion. Yet the government is "loaning" them over $15 billion dollars.

'We the people" could have bought GM at least 10 times over for the amount we have and will 'loan' them.

AustinRoth

GM needs to go into bankruptcy for thing WAY more core than the labor contracts. As others have pointed out, those only constitute about 10% of the cost of manufacturer. they have other long-term debt they need relief from, and to close a number of divisions.

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