U.S. Moves to Overhaul Ailing Carmakers

The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out ”” a level of government involvement in business perhaps not seen since the Great Depression.

President Obama is scheduled to announce details of the auto package at the White House on Monday, but two senior officials, offering a preview on condition of anonymity, made clear that some form of bankruptcy ”” a quick, court-supervised restructuring, as they described it ”” could still be an option for one or both companies.

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Posted in * Economics, Politics, Economy, Office of the President, Politics in General, President Barack Obama, The Possibility of a Bailout for the U.S. Auto Industry

10 comments on “U.S. Moves to Overhaul Ailing Carmakers

  1. Fr. Dale says:

    [blockquote]His resignation is the latest example of the government taking a hands-on role in making major decisions at companies it is bailing out.[/blockquote] This is beginning to remind me of LBJ’s micromanagement when he personally selected what targets would be bombed in North Vietnam.

  2. David Keller says:

    Dale–Johnson had constitutional authority to bomb whatever he wanted to, reguardless of how stupid it might have been. He was constitutional Commander-in-Chief. Where in the constitution does it say the Federal Government can be equity owners in private corporations, and Barry can fire their CEO’s? Also, how does the Congress delegate its budgeting authority to The One, and just give him unlimited cash to spend on whatever he feels like? Of course, you already know the answer.

  3. Jeffersonian says:

    Obama is CEO now. He owns GM’s fate. Let’s start calling him Chairman Obama(o), shall we?

  4. Fr. Dale says:

    #2. David Keller,
    There are no arguments from me about the constitutional problems. I just think this “hands on” approach signals a rather desperate attempt to get things under control. In this “24/7-focus-group-pulse taking-blackberry-connected world”, the bigger issues are not being properly addressed. What got Obama where he is will not keep him there. Leadership does not mean taking over someone elses job, it means performing the job you were called to do. The people around him are experts at spin but he needs folks with sound solutions. This is no longer a campaign, it is governance with no excuses.

  5. Jeffersonian says:

    Jeff Goldstein cuts the Gordian knot with a modest proposal:

    [blockquote]Why all the formality? I say we just put all the corporate fat cats into a coliseum, have them fight armed members of the treasury department, and then let our new Emperor give a thumbs up or thumbs down to decide the fate of the survivors.[/blockquote]

  6. libraryjim says:

    It was interesting to note that GM sold just as many cars last year as Toyota, and only made about 1/2 the money. The problem is not sales, it’s profit. And Obama laid his finger on it the other day, when he was speaking about jobs that had left the US for overseas locations:

    “These jobs will never come back. If they did, it would not help the economy as they would not be able to pay a living wage [according to US standards].”

    Unions, minimum wage standards (I’m not against this per say), high corporate taxes, etc. are the problems that keep American corporations from making the profits corps in other countries enjoy.

  7. Nikolaus says:

    No matter how bad the economy is, I think it is a severely dangerous move for the government to force the resignation of a CEO.

  8. libraryjim says:

    Agreed, I think Obama overstepped his Constitutional bounds on this one.

  9. Daniel Lozier says:

    The U. S. Senate cannot even run its own cafeteria in the black. Name one thing our government does that is not costly and inefficient? This is dangerous to the point of being tyrannical and dictatorial. It undermines the very fabric of our country. We need to take Barry at his word: At his coronation he said, “We are going to change this country!” —–Well, he doing exactly that….and that’s what voters said they wanted.

  10. Daniel Lozier says:

    P. S.:
    Obama said, “….my team will determine whether Chrysler has met our demands.” WHO on “his team” has ever run anything??? Who are they to tell even a local grocery store how to run its business?!