There's an enormous difference between running a company's everyday operations and demanding a change in leadership in exchange for providing additional government dollars. If I offer GM $10 billion but say I'll only give it to them with certain conditions, I'm not running the company. That's just my investment requirement, whether it be a 10% interest rate or a change in CEO's. Private investors do that kind of stuff all that time.
Rick Wagoner is one of the most incompetent executives I've ever seen. Good thing Obama ousted him because the GM board would never have the balls to remove that bum.
Are these private investors also already trillions in debt? That sounds like a pretty crappy investor.
Irrelevant to the topic at hand. By the way, private investors also don't usually have a $2+ trillion annual income or the ability to print new money.
I tend to think that an incompetent, bankrupt agency trying to manage a company for a profit is pretty relevant.
i know what you mean but charging a high interest rate is one thing. forcing a change in ceo and demanding that the company produce "green" cars is another. yes the govt is not running the day to day ops yet but this is clearly a step in that direction in my eyes...especially with the demand for "green" car production.
These are steps in that direction but they are necessary steps and the government had every right to demand them. If GM wasn't going to submit a legit and viable business plan, no way they should get the money. Period. The U.S. auto industry has been one of the most convoluted messes for quite some time. The iron grip of the unions has to be broken and the top dog in charge of the company had to be shipped out to make a fresh start. Today, all of the stakeholders (unions, shareholders & management) know for sure that delaying, stalling and hardballing could cost them everything. Sorry to say this, but fear can be a great motivator. Everyone had their chance. I will be watching the "green car" thing. This is where Obama may be over-reaching.
So GM is going to go into bankruptcy anyway. I didn't like the first bailout a few months ago and I think my concerns are going to be proven true if GM goes into bankruptcy. I've felt all along that bailing out the Big Three was throwing good money at a bad investment.
I totally agree on the green car thing - that's a decision the gov't shouldn't be involved with. But things like a change in CEOs are demanded by major investors all the time in companies. It happened at Yahoo pretty recently. I think if the Price in Dubai that owns a chunk of Citigroup started making noise about Pandit, there'd be pressure on him. But in none of those cases is the investor running the companies. At this point, the gov't is essentially the largest owner (similar to AIG) so I don't think demanding any leadership changes is out of bounds, as long as the gov't isn't installing it's own people in those leadership positions to run the company.
It's highly doubtful that GM goes into bankruptcy at this point. Chrysler, on the other hand, may very well go that route.
I'm all for capitalist ideals but ... If GM wants taxpayer money, then they have to answer to taxpayer demands. It's as simple as that. I fully agree with Obama deciding to force Wagoner out if he is doing an unsatisfactory job of turning the company around. They can't leech taxpayer money forever, and the only way to make sure that doesn't happen is to force them to restructure. This is really quite simple as far as I'm concerned. The whole "government involved in private business" argument got defenestrated the day Wagoner stepped onto Capitol hill with a tin cup in his hand.
^ From the article: ""While Chrysler and GM are different companies with different paths forward, both have unsustainable liabilities and both need a fresh start," according to an administration document. "Their best chance at success may well require utilizing the bankruptcy code in a quick and surgical way."" Its certainly not a given that GM goes into bankruptcy but it appears to be leaning that way.
According to the WSJ, Obama said a "srugical" structured bankruptcy might still be needed for GM. Should have done that in the first place. They've just been delaying the inevitable.
The market is not liking it a whole lot, although there may be some other things going on. The Dow is down 300 points. (I'm so glad I don't own stocks!)
I've wondered that if GM could regain profitability by quitting the domestic passenger car market where they are uncompetitive, sell only trucks stateside and passenger cars where they have a market for them, and were exempt from the company-wide CAFE standards (still meet truck CAFE standards), would the Federal government allow them to do it?
It's all a scare tactic, in my opinion, to get more concessions out of everyone. If they were going to go that route, they would do it now instead of dumping more money into it and then sending it into bankruptcy. Instead, they gave them another 30 days to work things out, and they wouldn't rule out yet another extension. That's basically saying we really, really, really don't want to send you into bankruptcy unless you give us no alternative.
What about the Pontiac Aztek? The whole cast of upper management at GM should have been fired for not killing that monstrosity.
