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Tuesday, March 31, 2009

President Obama Now Chairman of the Board at GM, Chrysler

The President just fired the CEO of General Motors. He's telling Chrysler to merge with Italian carmaker Fiat (whither Pat and Nick's All-American Auto Mall?). And he's tapping the TARP to back the warranties on new GM and Chrysler cars. (FDIC for cars? Well, at least the TARP money is backing working folks' purchase of cars and trucks rather than financial abstractions).

Tell me if I'm wrong, but these are pretty radical steps, aren't they? Whether they are the right steps is open for debate, but Obama's current actions to save the auto industry seem like about as big a departure from the status quo as we can get without nationalizing Detroit. Now if we could just see similar forcefulness from the Administration toward the bankers and brokers who are getting even more of our money and not producing results, we might get this recession licked!

By the way, Mike Madden at Salon.com notes that GM CEO Rick Wagoner isn't even getting a nice severance package: "officials say he'll be kept on, in some harmless position, at his $1 annual salary, so taxpayers don't wind up on the hook for the multimillion-dollar pension he'd be entitled to otherwise." Ouch!)

Cranky conservatives were pushing the "Obama = used-car salesman" meme before 2008; maybe now they can have fun portraying the President as a new car salesman. Actually, Obama's take-charge turn is winning praise from some conservatives, who would rather see the controlled burn of bankruptcy than a possibly bottomless bailout.


  1. So now we have a guy who's never been in business, never run a business, never had to worry about profit or loss, benefits or employees, telling GM who it can hire and fire. Has anyone told President Obama that he is now President? Presidents don't get actively involved in corporate muckery like GM and Daimler-Chrysler (remember, the German's bought them out). What's next? Will Obama start naming the new vehicles each company produces? We're in the midst of the largest government nationalization power grab in the history of the United States. This reminds me of the decades of dirty politics and power in Chicago, Illinois. Hmmmm. Oh well, as they say, "give 'em enough rope and they'll hang themselves", and no, that's not any kind of a reference to anything. It's just a comment.

  2. Why is he not treating the excutives at AIG in the same manner?

  3. This is not new. Bush fired the CEO of AIG along with the CEOs of Fannie Mae and Freddie Mac.

    This is exactly what happens when an outside source of capital comes in to financially bail out a company. Do you think that when the FDIC has to rescue a bank that they keep the CEO around? Not so much.

    Think about it, the guy had lost $75 Billion over 4 years and on top of that lost market share along with it. As a taxpaying investor, he should be out.

    Also, if either Wagoner or the GM Board had wanted him to stay he could have...just not with the promise of anymore money from taxpayers to keep doing the same thing over and over and expecting a different result.

  4. Thanks for the input anon, but the question remains, why not the CEO of AIG?

  5. Anon 8:14---

    Daimler got rid of Chrysler in 2007. The majority stake of Chrysler is owned by Cerberus Capital Management, who owns 80% I believe...


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