Obama kicks out General Motors' CEO out of the job

[Sionnach Glic]

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. GM has received $13.4 billion in government aid, and has been seeking $16.6 billion more.

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 have to prove their viability as a condition of a federal bailout released under former President George W. Bush, and both have asked the current administration for more money. Ford has not sought federal funds because it had secured a line of credit just before money dried up.

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.

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.

Interesting. Now, if he'd go after the bankers I'll be happy.

[Monroe]

Its big news because he's not going after the bankers in the same way. Instead he's having lunch with them. I mean what kind of BS is that? Shows favoritism on the surface. Maybe tomorrow he will begin kicking some of them out or offering the same 'do or die' plan to AIG as he did to Crysler.

[Teaos]

Revenge isnt going to help anyone.

Sure the Bankers fucked all of us, but they only sholder part of the blame. And to go after them right now is pointless.

[Lt. Staplic]

I agree with Teaos, we'd all love to see the Bankers skewered alive...however nothing like that can or will happen until after this depression. We need the banks getting stronger and giving out credit again. hanging their CEO's isn't going to do that.

[Monroe]

Revenge isnt going to help anyone.

Sure the Bankers f***ed all of us, but they only sholder part of the blame. And to go after them right now is pointless.

I disagree. If we make an example out of them it'll stop future bankers from doing the same thing.

[Deepcrush]

No it won't. People kill and die for less everyday. Slapping people on the wrists wont do it. However if you leave them place with their money on the line they'll have reason to push things through. After everything gets better you can start rebuilding the banks any way you want.

[Teaos]

Revenge isnt going to help anyone.

Sure the Bankers f***ed all of us, but they only sholder part of the blame. And to go after them right now is pointless.

I disagree. If we make an example out of them it'll stop future bankers from doing the same thing.

Wishful thinking. These guys made billions, you think the lure of all that money is gonna be dimmed by the slim chance of jail time.

[Capt. Jethro]

The voters need to fire many of the politicians from both parties.

[Lt. Staplic]

but we're talking about the american public, they aren't smart enough to make a conection between bad politicians and bad economic practices.

[Mikey]

#1 - As someone who has followed GM professionally for quite some time, they should have sacked Rick Wagonner a long time ago.

#2 - They can't go after the banks the same way, for the same reason that the banks had to get bailed out first. Any upheaval in banking automatically precludes any forward progress in any other area of the economy. If the banks are left to founder, or are put in a state of flux, then nothing else gets done. The state of the banking industry affects every other economic aspect, not just in lending, but in the willingness to spend even currently liquid money. America is built on the idea of spending paper wealth (which was a big part of the initial problem, BTW.) If the people who really own the wealth that consumers are spending are left in any sort of uncertain light, nothing good can or will happen to any other part of the economy.

[Monroe]

Revenge isnt going to help anyone.

Sure the Bankers f***ed all of us, but they only sholder part of the blame. And to go after them right now is pointless.

I disagree. If we make an example out of them it'll stop future bankers from doing the same thing.

Wishful thinking. These guys made billions, you think the lure of all that money is gonna be dimmed by the slim chance of jail time.

Which is precisely why we should hit them hard. Change the law so that it is a very serious offense. Capital punishment wouldn't be too far from acceptable I think. Right now there's a slim chance of any jail time but you change the law and make examples and it'd happen.

[Lazar]

#1 - As someone who has followed GM professionally for quite some time, they should have sacked Rick Wagonner a long time ago.

Do you think the new guy Henderson will be an improvement?

[Capt. Jethro]

Redneck ramblings:

I believe that the American industry has gotten too arrogant. Too much in-breeding with the board of directors and what the hell did they learn in business school? After a while loyalty from consumers and employees in particular only goes so far.

In like manner the employees of the American industry need to wake up as well. They are paid to do a job and one should do it to their absolute maximum and should be fairly compensated, not lavishly. But the CEO's, execs and employees have become too wrapped up in their individual greed. I guess it's they way baby boomers were brought up. We, myself included, have become spoiled brats.

As far as letting the government control the industry, that really concerns me. They can't even manage what they have now and I have no confidence in either the Democrats or Republicans. The whole lot of them needs to be voted out.

[Mikey]

#1 - As someone who has followed GM professionally for quite some time, they should have sacked Rick Wagonner a long time ago.

Do you think the new guy Henderson will be an improvement?

Yes. Enough of an improvement? Time will tell, but I doubt it.

The sad fact of the matter is that American cars, and GM in particular, have advanced by leaps and bounds in quality and customer-friendliness/amenities in the last 5 years or so. The problems that have arisen recently stem completely from (mis)management, and not one iota from the product.

[Captain Seafort]

The problems that have arisen recently stem completely from (mis)management, and not one iota from the product.

You would say that though, wouldn't you.