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March 29, 2009

Obama Tells GM CEO to Hit the Road

The president will present the rest of his Ailing Big Two plan tomorrow, which White House aides are touting as tough on everyone involved. The first condition for future funds, however, appears to be GM CEO Rick Wagoner's resignation.

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.

Hey, you want the taxpayer money ya gotta dance to the government's tune. Is this a smart thing to do to keep more of our money from being tossed into the endless craphole that is GM? Beats me.

Even were Wagoner to stay, he wouldn't be in charge of his own company. The Obama Administration is setting the conditions for restructuring; it will determine how things will go for the workers, retirees, bondholders, and shareholders, not Wagoner or his replacement.

There is also this observation from the Politico article:

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.

Who's the boss now?

Thanks to numerous commenters for pointing out the story.


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posted by Gabriel Malor at 06:24 PM

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