GM CEO resigns at Obama's behest

**min0 lee** · 03-30-2009, 07:00 AM

GM CEO resigns at Obama's behest -
By: Mike Allen and Josh Gerstein
March 29, 2009 05:23 PM EST

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.

The White House confirmed Wagoner was leaving at the government's behest after The Associated Press reported his immediate departure, without giving a reason.

General Motors issued a vague statement Sunday night that did not officially confirm Wagoner's departure.

"We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement," the company said.

The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.

Wagoner has been CEO for 8 years and at GM for more than 30. It is not yet clear who would replace him, or what role the administration would play in that process.

Industry sources had said the White House planned very tough medicine in Monday's announcement, which turned out to be an understatement. And it went to the very top. The measures to be imposed by the government will have a dramatic effect on workers, unions, suppliers, bondholders, shareholders, retirees and the communities where plants are located, the sources said.

GM and Chrysler first requested billions in federal aid in November, warning that they could run out of cash in a matter of months if they didn't receive it. In December, President Bush agreed to loan $9.4 billion to GM and $4 billion to Chrysler.

Last month, GM asked for $16.6 billion more and Chrysler requested an additional $5 billion.

Earlier this month, Obama agreed to loan $5 billion to American auto parts manufacturers to help them weather the steep drop in new vehicle orders and the financial uncertainty at the Big Three.

Obama and his aides may have honed in on Wagoner for two reasons. First, his company is asking for the most in total federal aid: $26 billion, a figure administration officials fear could grow even larger. Second, the GM chief was tied more directly to the ill-fated decisions that that brought much of the American auto industry to the brink of collapse. Wagoner joined GM in 1977, has had a senior role in GM management since 1992, and became CEO of the company in 2000. He is considered responsible for increasing GM's focus on trucks and SUVs—at the expense of the hybrids and fuel efficient cars that have become more popular in the last couple of years.

By contrast, Chrysler CEO Robert Nardelli, whose resignation does not seem to have been demanded as a price of further federal aid, was a newcomer to the auto industry when he was lured to that company to help turn it around. Nardelli had previously headed Home Depot.

Government officials have little reason to tilt at Ford CEO Alan Mulally since his firm has not actually taken bailout funds from the government. Ford asked for a $9 billion line of credit from the feds, but the firm has said it has no plans to tap the credit facility.

Obama's move against Wagoner hearkens back to September 2008 when President Bush's Treasury Secretary, Hank Paulson, insisted that AIG CEO Robert Willumstad step down as part of an $85 billion bailout of the insurance giant. Paulson installed in his place Edward Liddy, a former Allstate executive. The AIG bailout has since grown to about $170 billion and Liddy has faced calls for his resignation in the wake of reports about hundreds of millions of dollars-worth of bonuses the firm agreed to pay to employees.

Obama said Friday in an interview with CBS’s “Face the Nation,” broadcast Sunday, that the carmakers were going to have to do more.

“There's been some serious efforts to deal with a combination of long-standing problems in the auto industry,” the president told host Bob Schieffer. “What we're trying to let them know is that we want to have a successful auto industry, U.S. auto industry. We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is.

“And that's gonna mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody's gonna have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road."

Schieffer followed up: “But they're not there yet.”

Obama added: “They're not there yet.”

The Obama administration calls its task force “a cabinet-level group that includes the secretaries of Transportation, Commerce, Labor and Energy. It will also include the chairman of the President’s Council of Economic Advisers, the director of the Office of Management and Budget, the EPA administrator, and the director of the White House Office of Energy and Climate Change. The Task Force will be led by Treasury Secretary [Tim] Geithner and [National Economic Council] Director Larry Summers.”

The panel’s chief adviser is Steven Rattner, a well-known investment banker and former New York Times reporter.

© 2009 Capitol News Company, LLC

**min0 lee** · 03-30-2009, 07:05 AM

GM CEO Rick Wagoner gets a bitter taste of the real world - President Obama's world

This is the way things work in the real world, the one where real people live and work, where they don't fly in on private jets to ask the government to bail them out after they have lost billions.

They don't get bonuses for being failures. They lose their jobs. They hit the bricks like the people whose jobs they eliminated with bad management and years of bad decisions.

You know what happened to Rick Wagoner of GM on Sunday? He became one of the guys on the line. Wagoner doesn't get to be the boss anymore because the President of the United States acted like one and fired him.

This happens all the time in sports, to coaches and managers, and it happens to executives at movie studios who back films that lose millions. It happens to network executives whose shows don't pull ratings. Sunday it happened to Wagoner.

And if the President really did it the way it's being reported he did, if his "restructuring" of GM and the auto industry meant restructuring Wagoner right out the door, good for the President. This wouldn't just be him talking tough about the auto industry or Wall Street or even Afghanistan. This would be doing something tough. There are so many workers in this country, up and down the pay scale, who wonder why the government can't restructure things so they can stay in business. Wondering where their bailout money is.

They aren't banks or bankers or AIG, the pig operation of them all. There are all the ones who own businesses that aren't GM and, when they can't pay the bills anymore, they close their doors. They become another boarded-up window in a country of them. They are out of luck and out of business.

Wagoner may have made his and may make a lot more walking out the door. He still gets to feel what it is like to lose a job in this America. His company has lost $82 billion the last four years. Lost nearly $31 billion last year. It finally took the government, the one that gave GM $13.4 billion in loans and then saw GM come back for $16.6 billion more, to call him on that.

As amazing as the losses is the fact that Wagoner lasted as long as he did. Guys like Wagoner always want to act as if they're victims. Like the bank guys want you to believe they all got hit by lightning at once.

It doesn't work that way. The wisdom on that comes from the great football coach Bill Parcells: You are what your record says you are. Wagoner's record is epic losses at General Motors. He goes.

On Monday, Obama is scheduled to tell the country his continuing rescue plans for the automobile industry. The rescue operation does not include a spot for Wagoner on the life raft.

On CBS' "Face the Nation" on Sunday, Obama said he talked about GM and Chrysler and all the rest of it, finally saying that he was looking for "sacrifices from all parties involved - management, labor, shareholders, creditors, suppliers, dealers."

Rick Wagoner went first. The first concession wasn't somebody on the line. It was the chairman and chief executive. The one who said that he had to spend another $20,000 flying GM's Gulfstream IV to testify in Congress because he was a busy guy trying to fix things at his company.

A couple of weeks ago, Wagoner was quoted as saying "99%" of his company's problems could be fixed. He also was quoted as saying bankruptcy might work for GM, but then again might not. He also said at the time that he'd been given no indication that he was on the verge of losing his job. So the guy was on top of things to the end.

GM will get more short-term government assistance. It will be propped up the way the banks have been propped up and AIG has been propped up. Chrysler will get more help, too.

But General Motors is the biggest car company in America. Wagoner has been on the job for eight years, a lifetime, and one during which GM was way too slow to start making smaller, more reasonably priced cars.

It would have been like staying with black-and-white televisions when color TV came around. And Wagoner was as loud as anybody in Detroit about the government saving him. The opposite finally happened Sunday. The only bonus he should get is carfare home.

**bio-chem** · 03-30-2009, 08:29 AM

this whole thing is a cluster bomb of shit. we should not be bailing these guys out and we should not be interfering in their business by getting guys to resign. the days of capitalism are dying quickly.

**min0 lee** · 03-30-2009, 08:37 AM

Really though....the guy failed big time. Why are we behind in the Auto industry?
It kills me as a proud American to see people buying foreign cars.

My friend had a 1964 or 1966 Thunderbird and when I went inside I was shock to see how many little gadgets they had, I believe we made good cars at one time.
I'll be honest though, the new cars are better than what they made in the 80's and 90' but we are so far behind.

We can do better, we should be number 1.

I am sure that the thousands of employees who were fired will not shed a tear for this guy.

**min0 lee** · 03-30-2009, 08:38 AM

Originally Posted by bio-chem

this whole thing is a cluster bomb of shit. we should not be bailing these guys out and we should not be interfering in their business by getting guys to resign. the days of capitalism are dying quickly.

Capitalism is good if the company wasn't failing and asking for bailout money.
That's welfare.

**Prince** · 03-30-2009, 08:38 AM

Originally Posted by bio-chem

this whole thing is a cluster bomb of shit. we should not be bailing these guys out and we should not be interfering in their business by getting guys to resign. the days of capitalism are dying quickly.

wow, I actually agree with you! let them go out of business, they obviously can't run one.

**lnvanry** · 03-30-2009, 08:56 AM

so why aren't the ibanks' CEOs getting replaced? They recieved more money than anyone.

**min0 lee** · 03-30-2009, 09:12 AM

Send them to the Taliband instead.

**tucker01** · 03-30-2009, 09:16 AM

Originally Posted by min0 lee

Send them to the Taliband instead.

Who is this band that you are speaking of?

**BulkMeUp** · 03-30-2009, 09:22 AM

Originally Posted by IainDaniel

Who is this band that you are speaking of?

oh didnt you know? they had a recent hit called "cha-ching cha-ching... where's my bailout?"

**min0 lee** · 03-30-2009, 09:33 AM

Originally Posted by IainDaniel

Who is this band that you are speaking of?

**FishOrCutBait** · 03-30-2009, 09:46 AM

Originally Posted by Prince

wow, I actually agree with you! let them go out of business, they obviously can't run one.

exactly. what business is it of ours to be saving them? if my flower shop at the bottom of a lake goes out of business, why should anybody but me or my employees have to pay for it?

**min0 lee** · 03-30-2009, 10:06 AM

Originally Posted by FishOrCutBait

exactly. what business is it of ours to be saving them? if my flower shop at the bottom of a lake goes out of business, why should anybody but me or my employees have to pay for it?

Most people file for Chapter 7 or Chapter 11, I think.

Another form of a bailout......."What's in a name? That which we call a rose
By any other name would smell as sweet."

**busyLivin** · 03-30-2009, 10:20 AM

GM is now Government Motors.

Obama decides the direction GM needs to go in even though he "doesn't want to run GM".

Now he can mandate the ass kissing of the united auto workers & and demand hybrids for the treehuggers.

He's good.. he's good.

**min0 lee** · 03-30-2009, 10:23 AM

What's wrong with Hybrids?

**busyLivin** · 03-30-2009, 10:26 AM

Originally Posted by min0 lee

What's wrong with Hybrids?

Nothing. I'm just pointing out that Obama is full of it. He doesn't want to run GM, but he's deciding what the right path for the company is.. which is going to be a sweet deal/political payback for the unions, and to push his bogus global warming agenda.

**Dale Mabry** · 03-30-2009, 10:44 AM

I say just let everyone fail, but Obama shouldn't be making personnel decision.

**busyLivin** · 03-30-2009, 10:51 AM

Originally Posted by Dale Mabry

I say just let everyone fail, but Obama shouldn't be making personnel decision.

**min0 lee** · 03-30-2009, 11:04 AM

Originally Posted by Dale Mabry

I say just let everyone fail, but Obama shouldn't be making personnel decision.

I agree to a point, CEO's have a little too much power and influence.
So just this once I am glad the Funky Overlord showed who's in charge.

But yes he does get too personal, has any other President meddled in personal business before?

I can barely remember Reagan firing 11,345 striking air traffic controllers and during one of the Baseball strikes I think one President was going to get involved. I can't remember which one it was.

**min0 lee** · 03-30-2009, 11:07 AM

Say what you will but the past Presidents catered too much to the CEO's and too little for the little people meaning everyone on ironmag except for 21inchpump. He has more oil wells than the Arabs.

**bio-chem** · 03-30-2009, 11:18 AM

Originally Posted by min0 lee

I agree to a point, CEO's have a little too much power and influence.
So just this once I am glad the Funky Overlord showed who's in charge.

But yes he does get too personal, has any other President meddled in personal business before?

I can barely remember Reagan firing 11,345 striking air traffic controllers and during one of the Baseball strikes I think one President was going to get involved. I can't remember which one it was.

No CEO's are beholden to stock holders and the board of directors. they should not be beholden to the president of the US. does anyone see in the Constitution where Obama has this power?

**bio-chem** · 03-30-2009, 11:20 AM

Originally Posted by min0 lee

Capitalism is good if the company wasn't failing and asking for bailout money.
That's welfare.

Capitalism is good. the fact that we are bailing them out shows we are moving away from it. you're right that is welfare. thats socialism. im against that.

**min0 lee** · 03-30-2009, 11:23 AM

Originally Posted by bio-chem

No CEO's are beholden to stock holders and the board of directors. they should not be beholden to the president of the US. does anyone see in the Constitution where Obama has this power?

Can the constitution help me if they ever try to fire me?

**min0 lee** · 03-30-2009, 11:24 AM

The Board of Directors did a lousy job....if they actually work.

**Burner02** · 03-30-2009, 11:46 AM

Originally Posted by min0 lee

I'll be honest though, the new cars are better than what they made in the 80's and 90' but we are so far behind.

We can do better, we should be number 1.

The odd thing though...most of the cars nowadays are built by machines by computers...to exacting specs. So...a Chevy should be as well built as a Honda...

**min0 lee** · 03-30-2009, 11:59 AM

Originally Posted by Burner02

The odd thing though...most of the cars nowadays are built by machines by computers...to exacting specs. So...a Chevy should be as well built as a Honda...

I know.

**brogers** · 03-30-2009, 12:27 PM

The cars are built as well as their japanese counterparts, but it is simply more expensive for the same car. Lots of foreign companies make their cars in the Southern US.

Alabama, Georgia, Tennessee, etc.. > Michigan. Unions are killing Detroit.

**Burner02** · 03-30-2009, 12:32 PM

I keep hearing that we SHOULD have let the companies declare bankruptcy to break the unions...and get back to making competitive cars...

**Big Smoothy** · 03-30-2009, 12:34 PM

Wagoner is a horrible failure.

How was he (and many others) allowed to even be around so long?

**min0 lee** · 03-30-2009, 01:09 PM

Originally Posted by brogers

The cars are built as well as their japanese counterparts, but it is simply more expensive for the same car. Lots of foreign companies make their cars in the Southern US.

Alabama, Georgia, Tennessee, etc.. > Michigan. Unions are killing Detroit.

Union or no union do you think a family in Detroit can manage afford to live on the salary they pay to do the same job in Alabama?

Originally Posted by Big Smoothy

Wagoner is a horrible failure.

How was he (and many others) allowed to even be around so long?

Go ask the Board of Directors, they should follow him to the door also.

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