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White House Asks GM Chief to Step Aside

By Jeralyn, Section Economy
Posted on Sun Mar 29, 2009 at 11:00:54 PM EST
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President Obama will unveil his plan to help the auto industry tomorrow. And General Motors chairman and chief executive G. Richard Wagoner is resigning at his request.

Wagoner's resignation was one of the White House conditions for more federal aid. "He agreed and will do that," a senior administration official said Sunday evening.

Wagoner, 56, joined the company in 1977 and has been chairman and chief executive since 2003.

In related news, Chrysler may have to merge with Italian-owned Fiat. A structured bankruptcy may be in the future for both Chrysler and GM. [More...]

Chrysler LLC has failed make its case to the federal government that it can be viable as a stand-alone company, and may have to resort to restructuring through bankruptcy court, the Obama administration's auto industry task force concluded in a memo released late Sunday.

The best chance for Chrysler and General Motors Corp. to recover "may well require utilizing the bankruptcy code in a quick and surgical way," the task force wrote in a memo summarizing its findings on the two auto makers. A "structured bankruptcy," the panel added, "would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success."

In two years, will everyone be driving cars made by Lexus, Mercedes, Audi/Volkswagon, Hyundai, Nissan, Kia and Honda?

Another question: Does this news mean the stock market will tank again Monday?

Update 3/30: Answer to stock question is yes.

< Obama Tough On Detroit, Easy On Wall Street | Late Night: Little GTO >

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    White House Asks GM Chief to Step Aside | 24 comments (24 topical)

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    And per the Politico, Chrysler is being let go (none / 0) (#1)
    by andgarden on Sun Mar 29, 2009 at 11:29:50 PM EST


    Ah, I read somewhere that (none / 0) (#2)
    by Cream City on Sun Mar 29, 2009 at 11:32:30 PM EST
    either Chrysler or Ford was not going to get bailout funds.  So the CEO is the price that Ford paid.  Or, shall we say, the price that we will pay, since it's our money.

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    Through the veneer of Politico's (none / 0) (#3)
    by andgarden on Sun Mar 29, 2009 at 11:38:57 PM EST
    gossipy journalism:

    White House sources bashed Chrysler's plan for recovery, saying that it contained overly optimistic and flat-out unrealistic economic assumptions.

    Not only that, these sources said in no uncertain terms, its cars aren't very good either.

    In a conference call with reporters, a senior administration official cited several awards recently presented to General Motors cars, but could think of no industry recognition for Chrysler vehicles. "Chrysler has no cars that are recommended by Consumer Reports," the official said.

    Hard to disagree. Except, well, that's a lot of jobs.


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    LOL (5.00 / 1) (#8)
    by The Addams Family on Sun Mar 29, 2009 at 11:47:27 PM EST
    Not only that, these sources said in no uncertain terms, its cars aren't very good either

    Reminds me of the punch line of that joke in which a guy tells his doctor he wants a second opinion. The doctor says, "You're ugly, too."

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    I have a Chrysler (none / 0) (#6)
    by Inspector Gadget on Sun Mar 29, 2009 at 11:42:26 PM EST
    and know plenty of people who do. You don't see them sitting along side the road with the hoods up like you do other vehicles. I hope the parts manufacturers stay in business.

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    As a Jeep Owner (none / 0) (#7)
    by Jeralyn on Sun Mar 29, 2009 at 11:46:03 PM EST
    I feel the same way. I switched from Mercedes to Jeep in 1988 and never looked back. I've loved all my Jeeps.  Guess I better get into the service department for my 3,000 mile checkup this week.

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    Maybe GM will keep the best (none / 0) (#9)
    by Inspector Gadget on Sun Mar 29, 2009 at 11:51:39 PM EST
    from all the makes and models they have to pick from :)

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    Chrysler beat Ford in sales (none / 0) (#12)
    by Cream City on Mon Mar 30, 2009 at 12:05:09 AM EST
    last month, after Chrysler took tough steps.  But so it goes -- and there goes about $15 billion in our money that it got in the first bailouts.

    Maybe Ford can hire the guys from Chrysler who figured out how to beat Ford in sales -- although the downside might be that you get beat down for it.

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    Cerberus Capital Management (none / 0) (#15)
    by Politalkix on Mon Mar 30, 2009 at 06:21:09 AM EST
    From Politico
    "One other factor that likely weighed on the Chrysler decision - though no Administration officials said so explicitly - is that Chrysler is owned by the secretive private equity firm Cerberus Capital Management. That firm, which is headed by former Bush Administration Treasury Secretary John Snow, is presumably sitting on billions of dollars in cash, yet has declined in recent months to provide additional financing to its own portfolio company. That means either that Cerberus is much poorer than most investors assume, or that it has concluded on its own that Chrysler is a lost cause."


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