This Is No Way to Run a Car Company

The Obama administration has decided it literally wants to be in the driver's seat as it gets ready to fork over tens of billions more to keep the automakers alive. The government tossed General Motors (NYSE: GM  ) CEO Rick Wagoner from the car today.

Welcome to United States Car, Inc. Did I miss a shareholder vote? 

Make no mistake; this is as clear-cut a government seizure of a private-sector business as any of the actions recently taken. As a condition of giving GM more aid, Wagoner was forced to resign, while bondholders, lenders, shareholders, retirees, and unions will also be made to accept new "sacrifices." Shares of GM opened down 25% today at $2.76.

He who pays the piper calls the tune, and it was with good reason that I cautioned GM and Chrysler to be careful about what they wished for, because when you dance with the devil you're bound to get burned. No doubt Ford (NYSE: F  ) is feeling pretty good about having so far resisted the government's tainted money. 

It's not so much that Wagoner is out. Getting rid of him may have been a necessity, and perhaps it would have been even better had Kirk Kerkorian succeeded in getting Carlos Ghosn of Nissan (Nasdaq: NSANY  ) installed a few years ago.

The rather frightening part is the president of the United States overruling both GM's board of directors and millions of American shareholders to oust the top executive of a publicly traded company. It's eerily reminiscent of the government sacking American International Group (NYSE: AIG  ) CEO Robert Willumstad and installing Edward Liddy in his place.

A change at the top of GM could have taken place had the company sought the bankruptcy protection that was so obviously the solution here. All of the costs that have been suffocating GM could have been resolved without risking taxpayer money. But in no way should regime change come about because it is demanded by politicians who are only interested in the latest poll numbers and what they mean for their re-election chances.

Wagoner recalled
Wagoner presided over some massive changes at a car company in the throes of a cataclysmic industry shift, but he was also the poster boy for what was wrong with GM. Remaining beholden to gas-guzzlers like the Hummer for too long and refusing to consider bankruptcy reorganization are just a few of his sins.  

But he also directed the shedding of tens of thousands of jobs, closed inefficient factories, and ushered in the Chevy Volt, which may be the car to herald GM's resurrection. While the company remained saddled with debt and legacy costs like union contracts and the health-care tab, Wagoner was guilty only of having some intractable negotiating partners sitting on the other side of the table.  

Who else is POTUS eyeing?
Bankers would be wise to watch these developments very closely, considering the number of times they've stuck their hands into the till. That means you, Ken Lewis. It's hardly a stretch to say that the head of Bank of America (NYSE: BAC  ) is viewed as just as much of a liability as Wagoner was. His shifting stance over when bonuses were approved for Merrill Lynch remains a trip wire, particularly in the aftermath of the political outrage over AIG's bonuses.

Anyone who is considering taking a government handout is no doubt thinking twice about it this morning. The toxicity of accepting the government's "help" is no less fatal than having to seek recourse in bankruptcy protection. The strings that come attached to the aid can end up strangling you.

It used to be said, "As goes GM, so goes the country." With President Obama taking the wheel and firing the executive of a company in the private sector, that bromide has more ominous overtones than ever.

Nissan is a Motley Fool Global Gains pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


Read/Post Comments (64) | Recommend This Article (78)

Comments from our Foolish Readers

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  • Report this Comment On March 30, 2009, at 1:27 PM, KarolKarol wrote:

    Bottom line: I will never buy an Obamabile.

  • Report this Comment On March 30, 2009, at 1:29 PM, TexasLonghorns wrote:

    People wanted change and were fore warned by anyone who would listen that the change with Obama would be socialist, liberal agendas under the guise of change we could believe in....be careful what you wish for...you might just get it!

  • Report this Comment On March 30, 2009, at 1:55 PM, Milligram46 wrote:

    Its carmaggedon. It has begun

  • Report this Comment On March 30, 2009, at 2:32 PM, TMFBreakerRob wrote:

    Good article, Rich.

    This is a slow motion car wreck. So far, GM's incremental changes have never caught up to the industry paradigm shifts (plural). Now the government will try its hand. The lead governmental advisors have zero experience with manufacturing, yet will be directing the re-structuring of one of the world's largest manufacturers. I hope they get it right. Make no mistake...this is not a case of "Well, at least they can't do any worse!" That kind of response is worthy of no thinking person.

  • Report this Comment On March 30, 2009, at 2:41 PM, zehfool wrote:

    These bloated, inefficient companies are hypocrites. When times are good they praise "free markets" and capitalism, and oppose any government spending for regular people, but when times get tough they are first in line as corporate welfare socialists to receive our hard-earned tax dollars. They were doing it with a Republican president, and now they're doing it with a Democrat. Bankruptcy is their only choice now. If this keeps up, it won't be long before China and India are our overlords.

  • Report this Comment On March 30, 2009, at 2:47 PM, Deepfryer wrote:

    "A change at the top of GM could have taken place had the company sought the bankruptcy protection that was so obviously the solution here. All of the costs that have been suffocating GM could have been resolved without risking taxpayer money. But in no way should regime change come about because it is demanded by politicians who are only interested in the latest poll numbers and what they mean for their re-election chances."

    It's quite presumptious of you to say that Obama has such underhanded, self-serving motivations. Maybe the writers at the Fool should just stick to talking about stocks, and stay out of politics. I believe Obama acted in the best interests of our country when he forced Wagoner to resign. It's a move that I support 100%.

  • Report this Comment On March 30, 2009, at 2:48 PM, JibJabs wrote:

    This was inevitable. And I think one major obstacle was that Wagoner simply did not know any other way of doing business than the old GM way. That is, the inefficient way. I know government is no solution in the abstract, but if GM is to have any chance at all at restructuring in 60 days (which I don't think it does), a new guy at the helm sends a pretty strong message: you're next, buddy.

    Something else occurred to me. Has anyone considered that GM was deliberately given time to prove itself inadequate to the country as a whole? What I mean is this: if GM had gone bankrupt at Dow 666, what do you think would have happened? Would the camels back have been broken? In a crisis of confidence, what could possibly be more symbolic to the American populace than GM's capitulation? Perhaps, whether intentional or not, allowing the American public (and not just the more clairvoyant members of the business community) acclimate to the bankruptcy of GM its potential to engender undue panic (beyond the systemic cascade of dominoes) was a shrewd political move. I doubt that was intentional, but it's worth considering where we would be today had GM gone bankrupt at the apex of the DOW's fall; how much confidence would have fled the market then and how long would it have taken us to recover?

  • Report this Comment On March 30, 2009, at 2:48 PM, madmilker wrote:
  • Report this Comment On March 30, 2009, at 3:00 PM, wuff3t wrote:

    "I believe Obama acted in the best interests of our country when he forced Wagoner to resign."

    No he didn't. Even if what he did was correct in terms of the future of GM even the President of the USA has no right to oust the CEO of a PLC - that's the shareholders' prerogative, and theirs alone. If you disagree with that you probably shouldn't own stocks because you have no guarantee that politicians won't intervene in the affairs of ANY company you might choose to invest in.

  • Report this Comment On March 30, 2009, at 3:06 PM, Milligram46 wrote:

    I predicted this on February 9, 2009, the first step has happened - I hope the rest is wrong.

    http://boards.fool.com/Message.asp?mid=27423206

  • Report this Comment On March 30, 2009, at 3:07 PM, darkstarsky wrote:

    I find it amusing that every time Obama tries to do anything Republicans are so obvious in that they state every time "change with Obama would be socialist, liberal agendas". It does not matter what he does or does not do, Republicans (the party of NO) bring out every *ism* they can think of (Socialism, Communism, Marxism, Liberalism, YouNameIt-ism). Of course, they would have never said a thing about Bush's bailing out the banks (oh, that is just saving the banks…it is just the free market). Republicans, you cannot have it both ways!!!

    BTW, I thought the Fools was about stocks and the stock market, yet lately all of the headlines seem to be more about politics and Obama...you guys really should stick to what you are good at and not play the politics game.

  • Report this Comment On March 30, 2009, at 3:17 PM, Milligram46 wrote:

    But this is about the stock markets. The POTUS pushed out the CEO of the 4th largest publicly traded corporation in the world (GM is number four on the global Fortune 500 list for year ending 2008).

    As wuff3t noted, that if the White House yields that much power over a publicly traded firm, then the impact to shareholders is chilling.

  • Report this Comment On March 30, 2009, at 3:18 PM, TMFDiogenes wrote:

    The White House's actions seem pretty reasonable to me. If a company comes hat-in-hand to a lender, it's absolutely within the lender's rights to make whatever demands before giving that money to make sure they get paid back. There is no seizure of private capital going on whatsoever. If Wagoner didn't want to resign, he didn't have to. GM just wouldn't get the loan. Why is it that attaching conditions to bailout funds is worse than giving money away without conditions?

  • Report this Comment On March 30, 2009, at 3:31 PM, Deepfryer wrote:

    darkstarsky:

    Yep, it's pretty funny how they come out of the woodwork. When Obama passed the stimulus bill, containing massive tax cuts, Republicans were suddenly concerned with the national debt. I guess they conveniently forgot about the idea of "fiscal responsibility" while Bush was in office?

    wuff3t:

    The government didn't just "give" all that money to GM. It was an investment, and GM fully understood the fact that in return for the money, the gov't would demand some control over the company. They knew this all along. If the American public is being forced to invest in GM, then we should get some control over the company via our elected officials. We are all shareholders now.

  • Report this Comment On March 30, 2009, at 3:32 PM, Deepfryer wrote:

    And regarding GM shareholders: if it weren't for gov't "interference", all their shares would be worth $0.00 by now. Would that be better?

  • Report this Comment On March 30, 2009, at 3:38 PM, wuff3t wrote:

    TMFDiogenes,

    You might have a point, as long as that is done transparently and in advance (and the retrograde tax on bonuses seems to suggest that the current administration isn't too bothered about doing things that way). But to me it smells bad. If a company needs to be saved, it needs to be saved (ie with a financial handout) - but using that as an excuse to bully a shareholder-owned institution into a change of leadership feels wrong. At most I think he should only have been able to ask GM to call an EGM and vote on whether the CEO should stay.

    But I guess this brings us full circle, to the thorny issue of whether a government should be bailing a company out or whether they should let it fail. I guess the waters are bound to turn cloudy once a bailout has been agreed.

  • Report this Comment On March 30, 2009, at 3:46 PM, wuff3t wrote:

    Deepfryer,

    I kind of take your point, except that I think we're all getting a little too carried away with the idea that "we're all shareholders now". Do you (or anyone else) honestly believe the average taxpayer will really benefit if GM becomes immensely profitable in five years time? How - will we all receive money in the mail?

    The average taxpayer will see higher taxes for generations to come if the bailouts don't work; and will receive nothing if they do - governments will never, ever give us that money back.

  • Report this Comment On March 30, 2009, at 3:48 PM, Milligram46 wrote:

    I'd like to sell my shares of AIG and GM now please, thank you.

  • Report this Comment On March 30, 2009, at 3:51 PM, wuff3t wrote:

    Milligram46,

    Well I don't want them! Good luck :-)

  • Report this Comment On March 30, 2009, at 3:59 PM, theHedgehog wrote:

    What's now happening with GM and Chrysler was always inevitable, as neither company was taking their problems seriously; assuming the government would just bail them out, pay their bills, and life would be good. It's interesting that it takes a liberal president to establish conservatism where a conservative president would not.

    However, this is probably a shot at the UAW more than it is at either GM or Chrysler. UAW, of course, expected to cash in on the giveaway bonanza, and is a major part of the problem.

    Do I care what happens to GM or Chrysler? Pretty much no. Their current cost structures are to high to be supported by the available consumers. Splitting the company up, lowering the debt, and dramatically reducing labor costs (to match what the rest of make) may help ensure that at least some part of both companies endures. If not, well, we know that the Japanese competition produces good cars; and they're Made in America, too.

  • Report this Comment On March 30, 2009, at 4:13 PM, Deepfryer wrote:

    "Do you (or anyone else) honestly believe the average taxpayer will really benefit if GM becomes immensely profitable in five years time? How - will we all receive money in the mail?"

    Here's what we get out of it: we get to avoid a second great depression and 15% unemployment. And no, we are not currently in a depression - not even close.

    It sounds like you're leaning towards the "just let them fail" point of view. If that's the case, I think you're drastically underestimating the chain reaction of economic disasters that would occur if GM were to go bankrupt. I'm not a big fan of bailouts either, but I don't think there were any viable alternatives.

  • Report this Comment On March 30, 2009, at 4:21 PM, CAPTAINWACK wrote:

    Rich, good article but you missed the big picture by a mile. The truth behind the billions in bailout money was that the GM bond holders are mostly institutional investors who don't want to loss any more money. With that in mind you don't have to look to deep to see why Obama is set to funnel more cash into US-GM.

    The institutional investors have Obama's ear do to the massive campaign contributions they made. Kind of like AIG employees donating to Chris Dodd's campaign for friendly wording in their bailout contract. AKA BONUSES.

    So the billions going into the GM bailout is being used to continue paying these loans. So in the end the big investors won't get stuck settling for pennies on the dollar..the US tax payers will.

  • Report this Comment On March 30, 2009, at 4:31 PM, hybridmachine wrote:

    The administration did not force out Wagner. They simply said if GM wanted more taxpayer money, Wagner had to leave. GM was always free to turn down tax payer money and keep Wagner. No one forced GM into this predicament except GM. They are free at any time to simply file for bankruptcy and be done with it. You want the govt cheese, you get govt intervention.

  • Report this Comment On March 30, 2009, at 4:31 PM, wuff3t wrote:

    Deepfryer,

    No, I wouldn't let them fail either. As I said, once you decide to bail a company out you're in murky waters, but I agree with you that allowing a company the size of GM to go to the wall would be catastrophic for many individual communities, and bad for the wider economy.

    I just think it could be handled better. If it were up to me I would have offered the bailout on the terms that GM had to call an EGM with a view to potentially replacing the current management. GM's shareholders, knowing that the company is in such dire straits, would presumably be amenable to this idea.

    This is dependent on approaching a suitable alternative candidate (there must be someone out there who still knows how to run a car company! Or is there...?!) and securing their agreement to take over the running of GM if the shareholders vote the current management out.

    And then you leave it to the shareholders. I find it difficult to believe that they would vote to retain a board of directors who had guided the company to its current set of circumstances (maybe I'm wrong, but then I don't know what you can do if the shareholders are as lemming-like as the management).

    If my plan works you get new and competent management of a bailed-out company, as well as shareholders who still think their rights are being observed.

    I know this plan isn't perfect. I know you'd have to be incredibly naive not to realise that as a shareholder your choices were limited to:

    a) accept the bailout and vote to change management;

    or

    b) vote the wrong way and go bankrupt.

    But at least this way you're still leaving it to the shareholders, even if their choices are very limited.

  • Report this Comment On March 30, 2009, at 4:40 PM, dargus wrote:

    "No he didn't. Even if what he did was correct in terms of the future of GM even the President of the USA has no right to oust the CEO of a PLC - that's the shareholders' prerogative, and theirs alone."

    What about bondholders, which the government more or less is? If you come to me as a private citizen and say, "Please invest billions of dollars in my company," am I entitled to say, "Yes, but I want a new C.E.O." The answer is yes, and it is the company's right to refuse my request and my money. If the government is going to be loaning money, why should it be different? Wagoner was free to turn down the money and file bankruptcy. Since he didn't, I assume he believes money with strings attached is better than bankruptcy. It sounds like a pretty free market choice to me.

  • Report this Comment On March 30, 2009, at 4:42 PM, jsdiveguy wrote:

    I believe this article was written to stir discussion. Job well done on that count. The discussion seems to have a bit more political lean to it than I like for my usual Fool experience buts that's OK.

    The question is whether the government is acting as an investor or as big brother. Certainly any "angel" who shows up with enough cash to save the company will expect to have influence over company events. I have to conclude cash on the line equals a voice in the outcome. It's unfortunate that the voice is big gov't but that's the only group that'll still talk to GM.

    GM wouldn't be asking for gov't money if they had any other source. The harsh reality is they don't. Their credit and goodwill are depleted. Their executives and board have failed to overcome the market challenges that face(d) them. In other words, they're in a dismal situation. They either take the money and accept the conditions or go under.

    As for Mr. Wagoner he doesn't have much of a legacy to lean on. He's been there long enough to have implemented significant change. However, it hasn't happened. They still have 50+ brands, no hybrid (years behind on that count), and can't shake the market image that GM doesn't equal quality. My question isn't why fire him now, it's why has it taken so long ?

    In the final analysis, I'm not upset that gov't had conditions attached to the money. Every situation is different and I might not like it next time, but this time it's OK.

  • Report this Comment On March 30, 2009, at 4:43 PM, BMFPitt wrote:

    I always think things like these should be up to the shareholders...

    But let's get real, the shareholders in GM should be thankful that the government is continuing to hand them their welfare checks, because they should have been wiped out months ago.

    The government OWNS GM by any realistic measure. Hopefully this will serve as a warning to other companies that they should not get into the same position, since I have no faith that teh government will stop allowing them the chance.

  • Report this Comment On March 30, 2009, at 4:48 PM, wuff3t wrote:

    dargus,

    "If you come to me as a private citizen and say, "Please invest billions of dollars in my company," am I entitled to say, "Yes, but I want a new C.E.O." The answer is yes, and it is the company's right to refuse my request and my money."

    Aaah, now we're getting somewhere. So it's the shareholders who should be offered the right to choose then? And then they can decide whether they want a new CEO and the bailout money - or stick with what they have and no bailout?

    So why not do that? Give the shareholders the option to accept the government as part-owner, and in so doing effectively cede some rights to the government?

  • Report this Comment On March 30, 2009, at 4:48 PM, Deepfryer wrote:

    wuff3t:

    Good post. I can certainly understand and respect where you're coming from. It is a murky situation, but I'm ok with it. I'm just glad to see some fast, meaningful, and deliberate action.

    I want to respond to one other thing from the original article. The author credits Wagoner with starting the development of the Chevy Volt. That's great, but he also ordered the demise of the EV1 (http://en.wikipedia.org/wiki/Ev1). The EV1 was an electric car introduced more than 10 years ago by GM. It worked great and was a huge success during its limited introduction to the market in California. The demand was so high that you had to get on a waiting list if you wanted to buy one. Then suddenly, under Wagoner's orders, GM discontinued the EV1. Not only that, but they recalled all of the EV1's that had already been sold, and they destroyed them all in a secret location. A legitamate reason for cancelling the EV1 was never given, but you can make your own conclusions. All of the years of development work that GM put into the EV1 were flushed down the toilet.

    After that, Wagoner made little to no effort to develop hybrids or electrics for the next few years, and once again GM fell behind the Japanese automakers because of Wagoner's short-sightedness. So please, don't give this man any credit for the Chevy Volt.

  • Report this Comment On March 30, 2009, at 4:59 PM, TMFSpeck wrote:

    Sorry, Rich, but in my view, you're way off base on this one. The way was paved years ago by GM's stubborn refusal to see the world's turn away from trucks and SUVs, and their very late reaction to both competition and world events.

    That road was run on Wagoner's inability to respond when things got real bad, as well as an inability to put together a viable restructuring plan after asking for -- and accepting -- tens of billions in US government loans.

    We cannot afford to let GM fail, for the ripple effect would be worse than you can probably imagine. "Business as usual" is a sure path to failure for GM. In my view, the Obama administration is looking out for my tax dollars and the jobs of tens of thousands in this move, even if it isn't looking out for your vote as a shareholder.

  • Report this Comment On March 30, 2009, at 5:19 PM, Maraith wrote:

    What a silly article. They took the money and gave away their independence. Now you're surprised and shocked! that the new owners want a voice.

  • Report this Comment On March 30, 2009, at 5:57 PM, ds10 wrote:

    "But in no way should regime change come about because it is demanded by politicians who are only interested in the latest poll numbers and what they mean for their re-election chances."

    No matter how skilled the writer, if he includes

    an unsupported and inane statement like the above

    he has tainted his work.

    The author has succeeded in destroying the

    credibility of this article.

  • Report this Comment On March 30, 2009, at 5:59 PM, TMFTheDoctor wrote:

    i'm glad to see some Fools reporting in on this one in defense of the administration. let's leave politics to the politicians and the editorial pages of the newspapers, and maybe we can get back to talking about stocks. and to anyone who thinks this is talking about stocks, why don't you buy some shares of GM, go to a shareholder meeting, and tell management not to ask the government for money. because complaining about a lender placing conditions on a loan is not very productive.

  • Report this Comment On March 30, 2009, at 6:06 PM, Carmelita3612 wrote:

    There is no shock here at all! Since I bought my first VW (1971) and later HONDA's (1977 to the present 2004 Accord), I have never, ever wanted to buy an American CAR!

    I own a 2000 Ford Ranger because the used Toyota Truck I wanted are NOT AVAILABLE. And I live in Michigan.

    The stockholders are responsible for kicking out management, but GM and most Gigantic Industries are not much different from Big Gov.

    If the public wanted to buy these cars, would we be talking about this? I think not

  • Report this Comment On March 30, 2009, at 7:09 PM, cherokeewoman wrote:

    Cherokeewoman writes:

    To all commentators.

    You seem to have missed the most important point in Rich Duprey's article. Quote: "Make no mistake this is a clear-cut seizure of a private-sector business." "The rather frightening part is the President of the United States "overruled" and ousted the top Executive of a publicly traded company." unquote.

    Folks, don't you see what is taking place right before you eyes? When a country's economic environment is coming unglued, that country is weak and is ripe for a "a one-man rule". Remember the 1930s history? No business will be free to operate under government control. Such as the action that took place today is highly dangerous to America's freedom. Just wait---"you ain't seen nothing yet!"

    To freagul:

    Remember what happened when we let the politicians attempt to keep our economy from tanking from the stock market?? That is one good reason not to leave money matters to them to take the right kind of action to correct the economic crisis. They are reactionaries, not proactionaries. Wake Up before it too late. It's happening before your very eyes!

  • Report this Comment On March 30, 2009, at 9:36 PM, Deepfryer wrote:

    Just realized that the parentheses in my previous post are messing up the link to the EV1. In case anyone is interested, here it is:

    http://en.wikipedia.org/wiki/Ev1

  • Report this Comment On March 30, 2009, at 11:16 PM, TMFDiogenes wrote:

    Hey wuff3t,

    I think you make a good point: "Aaah, now we're getting somewhere. So it's the shareholders who should be offered the right to choose then? And then they can decide whether they want a new CEO and the bailout money - or stick with what they have and no bailout?"

    I think that's what probably would have had to happen had Wagoner not taken one for the team and resigned for the sake of GM getting the money. We can speculate that the administration would have found an (il)legal way to force his ouster (rather than ask him politely to resign at gun-point) behind shareholders' backs. If that had happened, then we could argue about whether the administration used its power as a political entity rather than as a creditor. Then we could have the debate about where to draw the line between expediency in the public interest vs. private property rights. But it didn't get to that.

    Again, didn't agree with you, but I thought you made a really interesting point.

    Ilan

  • Report this Comment On March 31, 2009, at 12:38 AM, FailureISanoptio wrote:

    "With President Obama taking the wheel and firing the executive of a company in the private sector"

    GM ceased their existence as a company in the "private sector" when the US government forked over $30B to a company with a market cap of $1.65B. The US owns GM, shareholders are lucky they haven't gotten the full Fannie/Freddie treatment yet.

  • Report this Comment On March 31, 2009, at 12:56 AM, wjarvis wrote:

    It seems to me that we the people are screwed either way. I don't believe Wagner should have been let go. All other stakeholders in the company should have had a vote. It was plan wrong for the administration to let this happen.

    Either way the company's stock is worth zero according to what I've read. Additional new stock will be issued to back the NEW GM, wiping out all value of the current stock.

    What's another million people out of work. Surely they can buy a new car with the tax breaks being offered. At this rate the people are going to remain paralyzed from buying anything because who knows how your jobs will relate to this mess. More than anyone else knows.

    GM kept saying that health costs are killing us. Well, they've succeeded in doing just that. Who's next?

  • Report this Comment On March 31, 2009, at 1:12 AM, kurtisj wrote:

    Are you collecting social security?

    "He who pays the piper calls the tune"

    followed by

    "be careful about what they wished for"

    followed by

    "when you dance with the devil you're bound to get burned"

    followed up with

    It used to be said, "As goes GM, so goes the country."

    Ended with

    "that bromide has more ominous overtones than ever."

    Anyways, Wagoner killed the electric car and battery technology that actually worked (he sold the rights to it to big oil for a song), the oil and car industries were heavily subsidized (socialized) throughout the last administration, and the Volt is a joke.

    Good riddance to Wagoner. GM was no longer private sector when taxpayers put up $30 billion to cover for the loss of a few million jobs during this Bush recession.

  • Report this Comment On March 31, 2009, at 7:50 AM, bougnoul wrote:

    geez: you people all have the same chirping just like birds of same feather!

    #1: if gov is all bad, wait till you go inside one of these companies with so-called "share holder interests" at heart, may be you wont come out with same naivete as you went in.

    #2, Companies strictly cater to CEO(maybe extended to his immediate entourage) a-la Don-Corleon interests, not you all who buy "shares" to dump your money. Then again, if you had 100mils, story maybe in line with what you all claim the capitalistic system to be.

    Not with a few thous. Sucker.

    Get on with it: someone sacked CEO of a despicable & failed company. Why should you care? This is too much saliva for noth'n.

    Chill out.

  • Report this Comment On March 31, 2009, at 8:29 AM, c0ffeen0te wrote:

    Right your are bougnoul

    Does anybody seriously think that this CEO who has been at the helm for 5 years now has done a great job? I have one question for Mr Duprey, does he want his tax dollars flowing into GM as run by the existing team? The famous definition of insanity is doing the same thing over and over and expecting a different result.

    A fair question is do we support them at all, but if we do, the move to oust the CEO is an obvious one. And by the way, we the taxpayers have become the shareholders.

  • Report this Comment On March 31, 2009, at 8:55 AM, max888 wrote:

    <i>Even if what he did was correct in terms of the future of GM even the President of the USA has no right to oust the CEO of a PLC - that's the shareholders' prerogative, and theirs alone. If you disagree with that you probably shouldn't own stocks because you have no guarantee that politicians won't intervene in the affairs of ANY company you might choose to invest in.</i>

    Sure he has the right. Heck, if a company takes out a loan and then finds itself in a situation where it can't pay it back, what do you think the bank will do? The bank will force the company to do certain things, perhaps select new management.

    As you might recall, GM borrowed billions from the government. Now it can't pay it back. Obama had every right to do what he did.

    Thanks for your warning at the end. If you buy a badly performing stock of the size as GM, you have to be pretty naive to think that the government would not get involved..

  • Report this Comment On March 31, 2009, at 9:48 AM, CAPTAINWACK wrote:

    Wagner is laughing all the way to the bank. He's set to retire anyway, this just pushed it up a year. I ask, how many readers on the Fool will retire with a $350k a year pay check with full medical benefits? Certainly not me. Any way you cut it Wagner's no fool and will be on a nice paid vacation for the rest of his life.

    Obama is just doing the Potomac Two Step on this one.....GM still gets billions of tax payer money for another two months. I thought March 31st was the deadline?

  • Report this Comment On March 31, 2009, at 10:46 AM, theatomichiltz wrote:

    I just bought some GM.

    Obama and the Dems will need the union votes. If the dempublicans let GM go, so goes all the union votes in what I predict a close presidential race in 2012.

    Is this crazy thinking?

  • Report this Comment On March 31, 2009, at 11:19 AM, dargus wrote:

    "So it's the shareholders who should be offered the right to choose then? And then they can decide whether they want a new CEO and the bailout money - or stick with what they have and no bailout?"

    It is Mr. Wagoner's decision to stay or leave, under any circumstances. If he wanted to send it to the shareholders he could, but didn't. Clearly he, as the company's day to day decision maker, decided leaving was in the best interest of either the company or himself, since he could have left for selfish reason as well.

  • Report this Comment On March 31, 2009, at 11:25 AM, mikecart1 wrote:

    It was bound to happen and anyone that is surprised doesn't see the clear logic. Government gives you billions. Practically owns the company already. They can do whatever they want. Now if they do the same thing to a company like Ford that hasn't accepted money like that, then that is a different story.

    Bottom line: you accept money, you accept whatever you got coming.

    Also the CEO was terrible since I assume he had last approval on the GM makes and models of which all were just disasters inside and out.

  • Report this Comment On March 31, 2009, at 12:44 PM, riwaterman wrote:

    I support the President.

    the Auto makers are living in the past and have refused to see the writing on the wall regarding greener cleaner more efficient vehicles. The Chevy Volt is too little way too late for the US. They should have never killed their original electric car. GM killed Saab but not understanding the car or its market and its customers. GM and Chrysler should have been realistic when they first came to the government help - now as the eleventh hour approaches they still don't have a plan.

    If they want the money, they have to play by new rules with new people and a new vision. GM is not the mark of excellence that they once said. I feel very badly for all the people being affected but GM brought it on themselves. The President acted correctly and strongly and courageously.

    I hope that a new GM will be a leader and speed up their consolidation, streamlining and schedule for new more efficient and innovative automobiles.

    Good luck GM, Thank you Mr. President for your courageous and correct decision.

    (oh by the way motley guys minimize the political writing)

  • Report this Comment On March 31, 2009, at 2:04 PM, rfaramir wrote:

    What I'm upset about is the bait-and-switch. What was called a bailout is now being revealed as a buyout. When a national politician can fire the CEO, that company has effectively been nationalized. Only it wasn't called that, at first, we only found out the truth later.

    Politically, I'm against nationalization, but ethically and morally, can't we all be FOR speaking the truth, as Rich has?

  • Report this Comment On March 31, 2009, at 2:34 PM, McCrikey wrote:

    Mussolini and Hitler are smiling in hell.

  • Report this Comment On March 31, 2009, at 6:10 PM, WhiteHatBobby wrote:

    The Obammy is going after GM because of a few weapons:

    1. GM advertised on conservative talk radio. We know how they want to go after talk radio's advertisers Take down talk radio since it doesn't fit with the Obammy's NWO.

    2. Bob Lutz (GM car guy) has wanted the New Impala and other big cars, trucks, and SUV's as their model. The Obammy wants everything to be microcar only.

  • Report this Comment On March 31, 2009, at 7:18 PM, mlaursen wrote:

    I keep seeing commenters saying that the Motley Fool should stick to writing about stocks and stay out of politics. Thing is, they ARE still just writing about stocks. It's just that the government is getting itself heavily involved in those stocks.

  • Report this Comment On March 31, 2009, at 11:52 PM, redneckdemon wrote:

    And suddenly any article so much as mentioning "Obama" is a political piece. I love it.

    Sure, anyone handing over cash is free to make demands BEFORE giving that cash, but the point is that shareholders should have been given the chance to decide the future of their company.

  • Report this Comment On March 31, 2009, at 11:54 PM, rjhubs wrote:

    I agree with this post here.. but you missed out on the opportunity to make a better pun.. USA.. United States Auto

  • Report this Comment On April 01, 2009, at 1:57 AM, wuff3t wrote:

    Hey to you too, TMFDiogenes,

    Thanks for your comments (and everyone else's for that matter), I've enjoyed the debate.

    I guess the proof of the pudding is really in the eating with this one, ie in 5 years time if the economy is back on track and GM is above water, then no-one will remember (or if they do, care too much) how Obama did it.

    And if the economy isn't back on track then I guess no-one will care either, as it seems that whichever side of the fence you sit on this argument almost everyone agrees that Waggoner wasn't doing a very good job.

    I'd just prefer not to see this repeated too often. Mind you if it does that would suggest there are no good CEO's out there at all, so perhaps we'd have bigger problems than debating the political rights and wrongs of this action...:-)

  • Report this Comment On April 01, 2009, at 4:33 PM, Deviddo wrote:

    We've been subsidizing car companies for years, both domestic and from abroad. What do we call building roads? Do you think car companies could sell many cars without the road system. It's called corporate welfare and we've been doing it for decades. Without our taxpayer dollars the average car would cost close to $200,000 in order to cover the road building part. So it totally makes sense for us (the government) to own the car companies, too.

  • Report this Comment On April 01, 2009, at 6:20 PM, mythshakr wrote:

    The shareholders have had months since GM first went to the Feds asking for money (stating to Congress that the current management team had the support of shareholders) to do all those things that those here say should be the realm of shareholders. For whatever reason shareholders chose not to act. Time was up. If you don't vote by voting day you don't get a vote.

  • Report this Comment On April 02, 2009, at 8:37 AM, robinet wrote:

    Deepfryer ???? hum, I can't think of anything that is good for you that comes out of a deepfryer.

  • Report this Comment On April 02, 2009, at 2:34 PM, nvmk wrote:

    I remember reading a few months ago an article that said Rick Wagoner knows the drastic changes that need to be done including the layoffs but is just too decent a guy to do it. Unfortunately, being a company and such a large one, sometimes you need to make cuts. If you dont make it fast enough - it takes the whole company down. The Unions managed to cut deals even when the company was making a loss. The union is as much as to blame with it as the management who went with the terms instead of just stopping work and cutting pay.

  • Report this Comment On April 04, 2009, at 8:51 AM, fritzey15 wrote:

    We all seem to forget. The Big 3 only built cars and trucks that the American people, if not only wanted, that we demanded. Every soccer Mom wanted a Tahoe or Suburban to take her kids to their games. Every contractor or wanne be 'tough guy" demanded a tough Dodge "Ram" to ply his trade. No one, I repeat, No one wanted to be caught dead in a Chevy Aveno. The car industry only built what the American buying public wanted to buy. Now we want to "crucify" them, put Rick Wagoner up on the "cross" and blame him for everything. The auto industry had nothing to do with the collapse of our financial markets.

    Go back in history and you will discover how many times the government has already bailed out CitiGroup. Our financial collapse is simply stated as nothing more than "greed, ego, and power". And the shame of it all is, not one of these "meglomaniacs" is gonna do jail time. The American people should be rioting in the streets and demanding their heads on stakes for what they've done to this country. Money is not the answer. We need to go back to the basics. Corporate governence, people of conscience need to be put in place. Their needs to be a rebirth of corporate morality. Then we can get back on track and follow our destiny as one of the greatest countries in the world.

  • Report this Comment On April 05, 2009, at 7:46 PM, mythshakr wrote:

    Firtzey15,

    "The Big 3 only built cars and trucks that the American people, if not only wanted, that we demanded."

    If that were a true statement we wouldn't be having this conversation. That vocal market segment has been steadily shrinking for the past quarter century or you wouldn't be seeing Toyota and Honda and Nissan capturing so much market share. That GM chose to support a decreasing market segment is just one of the many failing of its senior leadership.

    I remember thinking when GM forced all the EV-1 Lessees to return them at the lease end that they had just had committed corporate hari kiri. That market was clearly a growing segment. They willfully turned one of there greatest achievements into a failure. You have to work pretty hard to do that but they succeeded. By compounding that snafu by not following up on the EV-1 for over a decade with the [soon to be] Volt and meanwhile pandering to a shrinking market segment for Hummers clearly demonstrates a leadership with no viable long term vision.

    Rick Wagoner is just the figurehead of an entire leadership ethos at GM that needs to get the boot. That the Toyota Prius is not a Chevy Prius is the showcase of that failure.

  • Report this Comment On April 06, 2009, at 6:42 PM, DanielMack wrote:

    Not being a expert in these matters I need some things explained to me. 1. If a individual investor injected as much money into GM as the admistration has would anybody be suprised at them calling the shots. 2. In what other industry would the head of a company basically begging with hat in hand for a handout expect to have job security.

  • Report this Comment On April 06, 2009, at 10:24 PM, ditdog wrote:

    Sorry, I don't agree with the perspective of this article. When you take Uncle's money, you better be prepared to dance to the tune he plays. Ask anyone who gets or gives healthcare via Medicare coverage.

    Public money ALWAYS comes with strings attached and some of those strings have nothing to do with how well the private contractor executes their side of the bargain. That is why many private businesses will actually avoid government contracts. I am totally and completely un-surprised at the CEO shake-up. I am sure other interesting things will develop as well. Since I'd rather observe them from the sidelines and don't feel compelled to experience them firsthand as a stock holder, I sold my GM and Citigroup stock a few weeks ago. I decided that if I wanted to have the US Government as an investment partner, I'd just as soon buy Treasuries.

    If these companies are sick enough to need massive transfusions of government money, can we really consider them private businesses anymore? GM might still trade on the stock exchange, but Uncle Sam owns it. Watch out, Citi.

  • Report this Comment On April 08, 2009, at 9:52 AM, jesse2159 wrote:

    You are wrong, again. Once we became the owners, we start calling the shots. Rick Wagoner defended the old guard, the old board and the old UAW thinking. That dog won't hunt. Now it's time to impliment bankruptcy preceedings and hand the fate of the company to a judge. Unfortunately, GM is busy "structuring" the bankruptcy so that very little will actually change until it really does go bankrupt, and not in the way everyone thinks. IT WILL GO BROKE.

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