Sunday, March 29, 2009

Obama Adminstration asked GM CEO to resign, he's out

Well, he was in charge.

Ran the company into the ground.

No one is purchasing these cars.

Out of the big three, GM has the most debt.

Letting him go, is a start.

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 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.

As many say let the banks fail, which I agree for some, the auto makers are something else. Letting this industry fail means many who are getting retirement checks from one of the big three, probably won't any longer. Suppliers will have to cut thousands of jobs, many will go out of business. The automotive industry is a vicious circle. Too many hands in the pot and it can all go under. And this leaks down to the very citizen who owns a GM car or truck. Bankrupt means, what happens to your warranty and who will honor it? Do you see anyone stepping up to the plate for that one? I don't.

Obama will have a major speech tomorrow on the automotive industry, the last big one before he leaves Tuesday for Europe and the G20 Summit. Everyone will listen very closely to what Obama has to say about the automotive industry.

Wall Street Journal

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