GM CEO Resignation vs. AIG Corporate Bonuses?
Monday, March 30, 2009
I have a question for the wise sages of ATK…
President Barack Obama released a statement today about GM. In it, he said that Rick Wagoner, CEO of GM, would be resigning so that GM could be taken in a new direction. Specifically, he said, “This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it’s a recognition that it will take a new vision and new direction to create the GM of the future.”
Now, I am not as big of a supporter as others in Michigan and on this blog of the Big Three. I believe that they have dug their own grave a bit here, and that they are asking for taxpayer dollars to create new competition after they have misjudged automobile purchasers. That being said, though, I don’t think they are any worse than AIG and others who also severely misjudged their actions yet are being given a clean slate by the American taxpayers.
So, my question is this…
Why should CEO Wagoner be forced out of GM in order for them to get federal aid, while this was not true at all of the corporate executives at AIG (who, instead, received bonuses from the taxpayer bailout dollars)?
I look forward to your reasoned input on this…
19 comments:
I believe that they have dug their own grave a bit here, and that they are asking for taxpayer dollars to create new competition after they have misjudged automobile purchasers.
That's the sentiment from Team Obama and others in Washington DC; that somehow, GM was behind the curve.
That's crap.
GM responded to consumer demand for SUVs and light trucks. They build the best in the industry. The Chevy Malibu is eating the Camry's lunch. The Volt is considered to be the best new concept on the market. On and on, GM leads the market. It's a much perpetuated urban myth that GM has "missed the boat." Hardly anyone is buying a Prius, folks, and GM cars outperform their Euro competitors in safety.
Now, I believe that GM made a mistake in asking for the bailout money. Ford didn't, and will recover without strings attached. GM did, and now has to live with all the strings. It was a mistake to make Wagoner to step down, but I think he did it voluntarily. I think he saw that he had to do this, or GM's next plan, due in 60 days, would automatically fail. I think these auto guys, like Wagoner, are taking more heat because of what the government failed to do with the banks.
Forcing Wagoner against a wall is unnecessary, but to be expected from a group of people who don't own a GM and don't live in a state where that business is central to their economy. The real problem is that people aren't buying cars. Part of why they're not buying cars is because of the fucking rhetoric out of DC saying that buying a Ford or GM is a risky proposition.
I don't think it was just GM behind the curve, I think it was all of them. The autos needed to respond to customer demand for SUV's as well as have diversified product. They are a bit late with the Volt, but it is definitely a step in the right direction.
But that doesn't answer the question...
Why did Wagoner have to resign in order for GM to get federal dollars, when AIG execs didn't have to resign and are instead receiving bonuses/retention pay using federal dollars?
I still don't get it.
Interesting article in the Detroit News also.
The Chevrolet Volt will not save General Motors Corp., the U.S. government said Monday in its Viability Summary of GM.
It would seem that the auto industry doesn't have the same revolving door/insider relationship with DC that the Financial/Banking guys enjoy. I guess I can't see it as anything but a huge double standard.
I guess I can't see it as anything but a huge double standard.
Maybe I should have said simply that rather than saying it in 5 paragraphs.
the auto industry doesn't have the same revolving door/insider relationship with DC that the Financial/Banking guys enjoy.
That's about it. This is all about the bankers and not about the Big Three. Every day reveals just a bit more about Obama.
AIG probably isn't the best comparison. Their CEO, Edward Liddy, was just put in place in September in response to this mess, and works for $1 (with special bonuses to occur if he cleans things up). So Obama isn't going to oust him, he's the one facing the music and none of AIG's shenanigans happened on his watch. Liddy is the Murdock here, "It's not my war colonel, I'm just here to clean up the mess." (anyone? anyone?)
As far as Wagoner being removed... struck me as a case of scapegoat as well. I guess, if made to rationalize it, all I could say is that GM's problems are largely business related, that is "standard" corporate problems which they feel new blood can fix, whereas the banking/wall street issues are a confluence of several complicated factors that only those currenty entrenched really grasp, so they want to keep several of the current regime in place until the mess gets fixed. If I *had* to defend it, I guess that would be my line.
I agree with every thing Smitty said...
"It's Crap."
The one thing I wonder though , which is central to Andy's question, is whether or not Wagner was taking the situation seriously. He might have thought he would get the same treatment as the banks and did not come up with a serious plan. That is just speculation on my part.
As far as this bullshit about the automakers not having enough smaller cars, let me be as blunt as Smitty: That's crap.
If the big three relied on small cars for any amount of profit, they would have gone out of business long ago. The Volt won't save GM's profit margins any more than the Prius save's Toyota's. Neither car makes/will make money. They are the new halo cars. They are meant to act as advertising tools and rolling experiments, not profit-makers. In fact, the Volt is adding to GM’s current woes considering they are dumping a billion bucks into creating the thing just to please the green car freaks.
I think a few AIG execs got it in the neck last year, but, still, overall, Obama obviously feels perfectly comfortable flexing his muscles at the autos while he hands the keys to the Treasury to Goldman Sachs.
You know what Obama, Geithner, Summers, Bernanke, etal. would have said, had they been as beholden to the autos are they are to GS?
"Failure of the autos poses a SYSTEMIC RISK to the US and global financial system, with a cascade of ripple effects."
So remember: whenever you hear "systemic risk" a big swindle can't be far behind.
Maybe Obama will throw them a "systemic risk" bone at some point.
Applesaucer
If I *had* to defend it, I guess that would be my line.
Which is a bullshit double-standard.
Look: the financial sector, whose high-stakes betting collapsed our economy, and the world's, gets free money with no deadlines imposed and no need to fire anyone. The auto-makers, who did nothing more than respond to consumer demand get strict deadlines, over-the-shoulder glances at exactly how they will spend the money, and are required to fire at least one of their CEOs.
That's fucking bullshit. And what's bullshit is not that the auto makers had to comply with those hoops. It's that the financial sector DIDN'T. And still doesn't. And won't.
Ford played it right. Skip the government money and skip the strings. But the financials begged the money just as bad as GM, but have none of the strings.
whereas the banking/wall street issues are a confluence of several complicated factors that only those currenty entrenched really grasp, so they want to keep several of the current regime in place until the mess gets fixed
We know what failed and what ultimately collapsed the economy, and it's not complicated to understand it any more, and why in the name of fuck do we want to keep the same assholes in charge who came up with the high-stakes bets in the first place?? So they can figure out how to make more??
[/head exploding]
GM had taken some losses on some of their lines. They could have scaled back some on those models. But I believe that it probably wouldn't have mattered. Destruction of industry in the USA has been engineered.
The economy / fuel price cycle is in overdrive because the banking industry has been allowed to blow huge bubbles and then profit from them, destroying large swaths of the economy in the process.
Had the finance industry been better managed, the automakers would've had a less chaotic market place to deal with.
Ultimately, it's the engineered bubbles in the financial systems, that are destroying industry in the USA.
The destruction of factories is one more parallel that we have in common with Argentina, and their engineered demolition.
We've depleted most of our natural resources, we've gone deep in debt, we still use 25% of the world's oil. If we are taken out, economically, that will free up more resources for folks in other countries to enjoy.
Saudi Arabia, Kuwaiit, the UAE (the folks that financed 9/11), are building factories to produce many goods manufactured in other parts of the world. They creating a close economy, that will use their oil and natural gas to produce goods and services that they require.
Take the USA, Europe and Australia out of the consumption picture and they can fall back on a semi-enclosed economy.
Don't forget that GM's financial arm lost big to.
Where is DiTech's bailout?
Or are they getting one through AIG?
Wagoner DOES deserve to lose his job. But it should have been at the hands of his board or stockholders, not the President or his Treasury Secretary.
Not unless they are going to hold the financial thieves on Wall St to the same standard.
As I said at my place, in a vacuum, I have no problem with a bailout coming with all sorts of strings attached.
But making one industry jump through this many hoops after the financial sector all got "get out of jail free" cards AND collected $200 when passing GO.
Did I say $200? I meant $200 Billion.
$200 in monopoly money = $200 Billion in U.S. currency.
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