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Monday, March 30, 2009

GM and Chrysler's stay of execution.

I'm of a couple different minds on this one, especially chopping Wagoner. Even the reliably-liberal Detroit Free Press editorial board is balking at that.

President Barack Obama’s Auto Task Force may have crossed that line over the weekend, when it asked for GM Chairman Rick Wagoner’s resignation and demanded that Chrysler link up with Fiat in 30 days, or give up on any more government aid.

It’s hard to see how either move is far shy of actually running the businesses. And if that’s the case, if the auto companies’ federal overseers have decided they’ll make managerial as well as financial decisions, this sets an awful precedent, both on general principle and in these particular instances.

The principle at stake says government shouldn’t manage industry. GM and Chrysler have their own internal managers who run the business.

The government is just supposed to be helping with funds, and oversight, to help the companies through a tough economy and a serious industry transition.

mortgage companies and other bailout recipients aren’t being subjected to government meddling, or even much oversight. Why are GM and Chrysler being treated differently?

But, you have to remember that when Chrysler received its loan back in the late 70s, one of the conditions was that its then-chairman John Riccardo had to go. And the chief doofus at AIG got the boot when Paulson started pouring money into that black hole in 2008, so it's not exactly unprecedented. The part that nags at me is that Wagoner strikes me as less-culpable and more forward-thinking than the financial CEOs still sitting pretty in Manhattan. Not spotless--ha! Hardly. But if Wagoner has to go, then heads ought to start rolling like tumbleweeds elsewhere. Oh, and even in political terms, it might have been a stupid move.

All that said, it sounds like the government had reason to be skeptical of the restructuring plans put forward, and Uncle Sam's calling the tune. The ladies have little choice but to dance accordingly. Or file for Chapter 11.

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