The New Black

Is this the first time the gubmint has told a CEO to step down? I've never heard of it before. It scares me.

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battinlash

What's so scary about it? Wagoner could have said no. He wasn't forced out. But his company wants government money to operate, so they're going to have to play by the government's rules.

The New Black

I think he was forced out. The government is stepping in a bit too much.

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helloitsio

I don't see it as a bad thing - if GM needs a handout from the government, then like battinlash said, they have to play by the rules.

There's a reason why GM needs a hand out versus other American auto makers like Ford: their cars aren't selling. Shouldn't the man responsible for the fate of the corporation take the blame?

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Cynaminbear

It's wrong and unConstitutional. Government doesn't have any business being involved in such a way. I'm disgusted more and more every day.

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cympreni

The government has been doing that for years to people who receive welfare. I don't see why it should be any different with them.

Suburbanbushbabe

I don't think the government should make those sorts of decisions for private industry. But there is a lot of money at stake and I see why they would make that a condition of providing more money. It's like throwing good money after bad.

I also think Waggoner could have done much more, and faster, to keep GM from total ruin. I'm in favor of a controlled bankruptcy/restructuring. I'm tired of this toxic asset bullsh-t. A toxic asset is nothing but a frikkin loss, but oh sorry, this is the Emperor's new clothes.

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mandatoryfun

No, not the first time. First, there's a distinction: the government didn't TELL him to step down, they simply said that the CEO would need to step down if GM were to accept federal aid.

This has happened before:

September 2008, at Fannie and Freddie: http://www.treas.gov/press/releases/hp1129.htm

"I appreciate the productive cooperation we have received from the boards and the management of both GSEs. I attribute the need for today's action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction. GSE managements and their Boards are responsible for neither. New CEOs supported by new non-executive Chairmen have taken over management of the enterprises, and we hope and expect that the vast majority of key professionals will remain in their jobs."

Again at AIG, also in September 2008: http://www.usatoday.com/money/topsto...-09-16-0_x.htm

"In the most far-reaching intervention into the private sector ever for the Federal Reserve, the government stepped in Tuesday to rescue American International Group Inc. with an $85 billion injection of taxpayer money. Under the deal, the government will get a 79.9 percent stake in one of the world's largest insurers and the right to remove senior management. AIG's chief executive, Robert Willumstad, is expected to be replaced by Edward Liddy, the former head of insurer Allstate Corp., according to The Wall Street Journal, citing a person it did not name."

Keep in mind that both of those incidents occurred under Bush. So, no, Obama wasn't the first to do it. It's just bad reporting and demonizing the black man, as always.

Should we be scared by this? Possibly. A lot of people I know are speculating that in the future this might "creep" into other companies/industries that the government doesn't own. Personally, I don't see that happening. Obama is characterized as a socialist in the mainstream media, but for anyone who follows his policies, that is truly an absurd accusation. The last thing he wants is for the government to own or run companies...otherwise he would've nationalized the banks by now! So, no worries, Phoenix.

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RedCatWaves

The gov't has always done this. I don't know why it's such a big deal this time. When I worked at Big Pharma companies, we were forever getting in trouble with the FDA. When we did something really wrong, the president of a division would have to resign as punishment. These execs all have golden parachutes, so don't feel too badly for them.

Eilonwy

Obama is a right-leaning centrist, and so is the Democratic Party as a whole. I don't exactly foresee a slippery slope to communism.

Of all the industrialized nations, only in America is centrism seen as the far left.

frau

oh my goodness! thank you so much for clearing this up. i was in total agreement with phoenix until i read your quotes (and skimmed the long articles).

it scares me that in order for me to feel obama's moves are correct i have to first see that someone else has done it before. i feel bad that i can't just accept his moves without them having to be validated by history. (and i'm black and liberal! )

Boomygrrl

Yeah, it was done under Bush as well. But I do not like government getting involved like that. I really don't. I'm not saying they shouldn't...people can attach strings to money they give out...I just don't like the idea very much.

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xcptnl

I agree. I don't think it is a good idea. I understand it but I don't like it.

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xcptnl

I feel the same way. Especially the part about his moves having to be validated by history. It's unsettling.

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mrspoppers

Not necessarily. If they accept aid from the government, golden parachutes are a no-no. This rule came down last fall, long before the current performance bonus brouhaha. Although car makers are held to a lower standard than banks, apparently.

757diva

If GM or any company gets aid from the government then the government should be able to have some say so in what goes on with the company. Just like people that receive aid from the government they have rules and guidelines so why should it be different for a company?