GM CEO resigns at Obama's behest
The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.
On Monday, President Barack Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.
Do we really need the Presidential Task Force (none of which have any auto industry experience) & the Treasury Department to lead the auto industry? The Treasury Department hasn't even filled all of their vacancies. We don't really have a full and functioning Treasury Department. Shouldn't they concentrate on actually doing their job first before branching out into Detroit?
Has anyone even asked if this is constitutional? Is the Constitution even worth the paper it is printed on?
Obama has jumped right into the fray on this, and now he owns everything that comes next. As a political move it is pure idiocy. He can't save Detroit. It is going to go down the drain with or without him. But once you jump in, fire the CEO and start running the company like it or not you own it. Like Colin Powell at the Pottery Barn, the time to be careful is before you get it.
From the New York Time’s David Brooks:
Car Dealer in Chief
Well, the president certainly acted tough on Monday. In a show of force, he released plans from his Office of People Who Are Much Smarter Than You Are. These plans insert the government into the car business in all sorts of ways. They pick winners (new C.E.O. Fritz Henderson) and losers (Rick Wagoner). They basically send Chrysler off into the sunset. Joe Biden will be doing car commercials within weeks.
The Obama team also raised the bankruptcy specter more explicitly than ever before. Even more tellingly, the administration moved to “stand behind” the companies’ service warranties. That lays the groundwork for a bankruptcy procedure and should be a sharp shock to Detroit.
And yet by enmeshing the White House so deeply into G.M., Obama has increased the odds that March’s menacing threat will lead to June’s wobbly wiggle-out. The Obama administration and the Democratic Party are now completely implicated in the coming G.M. wreck. Over the next few months, the White House will be subject to a gigantic lobbying barrage. The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures. Unions will be furious if the Obama-run company rips up the union contract. Is the White House ready for the headline “Obama to Middle America: Drop Dead”? It would take a party with a political death wish to see this through.
The scary thing is, I don't see where all of this ever stops. I don't see an exit strategy. With every move the government is getting deeper and deeper into a game they know little or nothing about. With every stumble, they will have the incentive to go even deeper into the belly of the beast. What is the endgame. We don't know. All that we do know for certain is that they don't know either.
Also from the NYTimes:
For U.S. and Carmakers, a Path Strewn With Pitfalls
As an assertion of government control over a huge swath of the industrial landscape, President Obama’s decision to reshape the automobile industry has few precedents.
In essentially taking command of General Motors and telling Chrysler to merge with a foreign competitor or cease to exist, Mr. Obama was saying that economic conditions were sufficiently dire to justify a new level of government involvement in the management of corporate America.
As the company’s lender of last, last resort, the government will have the final say on every significant decision until the company is turned back out into the free market. And [B]for Mr. Obama, that entails many political risks[/B].
If the generous health care plans that autoworkers have grown accustomed to are pared back, if wages fall to something closer to what workers at the Japanese and German transplants in the South are paid, it will be Mr. Obama — not G.M.’s management — who will be blamed.
Very few precedents indeed. We are pretty much in uncharted waters. Full speed ahead!
Wall Street Bets Obama Will Fire Bank CEOs Next Says CNBC Reporter
Network's NYSE floor staffer Bob Pisani: 'Several' bank executives are to be pushed out next.
After General Motors (NYSE:GM) Chairman and CEO Rick Wagoner was forced out by President Barack Obama, Wall Street is betting bank CEO firings will be the next shoe to drop.
CNBC’s New York Stock Exchange floor reporter Bob Pisani told viewers of CNBC’s March 30 “Street Signs” the market’s actions, with the Dow Jones Industrial Average (DJIA) dropping as much as 300 points, are reflect, in part, that the government is going to force bank CEOs out as they did with Wagoner.
“Look, the main concern here today is Geithner’s comments that some banks are going to need a lot more capital,” Pisani said. “And for everybody who says why haven’t they fired anymore bank CEOs yet – why hasn’t the government done it, wait – they’re going to.”
“The Street basically believes there are going to be several of them fired at this point,” Pisani said. “We don’t know who. It may not necessarily be the biggest ones. You may see smaller ones. But the government has set up everything just like they did with the auto companies to basically start dismissing some CEOs of banks now and I think you’re going to see that happening and that whole issue is weighing on it.”
Some people on Wall Street are now expecting Barack Obama to start firing CEO's in other sectors of the economy, like banking or insurance. Where does this end? What are the rules? If the Constitution isn't a constraining document, are their any rules? What are the limits to executive power? What will this do to the market?
Mickey Kaus at Slate:
• Wagoner: Obama's Diem?
Rick Wagoner = Ngo Dinh Diem? Discuss. [B]After visibly defenestrating GM CEO Rick Wagoner, and moving to replace the board of directors, won't Obama now "own" the GM problem? If the company shuts down in the near future, costing tens of thousands of blue collar jobs, it will be under executives implicitly or explicitly chosen by Obama. It will be Obama's failure, not simply GM's failure, no?[/B] A public sector failure, not just a business failure. Doesn't that make it harder, not easier, for the administration to walk away and force the company into bankruptcy (if, for example, the company's plans for "viability" continue to fall short after the new 60-day deadline)? And doesn't that, in turn, make extracting the necessary concessions (by threatening bankruptcy) more difficult as well? ...
The main problem with government is that it is easy to expand and difficult to contract. We have seen several days in the early Obama administration which represent sweeping expansions of the Federal Government. I fear that more days lie ahead. I can't see how one could argue otherwise. How are we ever going to undo the damage? How long will it take? It is apparent to me that these people have no idea what they are doing. This is the Change that we can believe in. Sphere: Related Content