GM CEO & Chairman Rick Wagoner to Step Down; Obama to Give GM & Chrsyler More Time to Meet Goals
General Motors (NYSE:GM) confirmed Monday morning that CEO and Chairman Rick Wagoner is stepping down immediately following the White House's rejection of restructuring plans that were submitted by both GM and Chrysler. In a written statement, Wagoner said that administration officials asked him to "step aside."
Taking over as CEO is Fritz Henderson, GM's current chief operating officer. Kent Kresa, a board member, will take over as chairman.
President Barack Obama is also expected to announce Monday that his auto task force doesn't believe that plans GM and Chrysler delivered in February will or even can result in viable companies. He's expected to give them more time, as well as an aggressive set of conditions.
Presently, GM and Chrysler are operating on a combined $17.4 billion in government loans that were approved by the Bush administration in December. They were given until March 31 to show that they were viable to qualify for additional loans. They have requested another $21.6 billion. The companies will be given more time, but Obama's administration has also not ruled out a controlled bankruptcy for either company.
Chrysler will be given 30 days to work out a proposed partnership with Fiat, or find a new partner. If they can make the Fiat deal work, they may be able to get an additional $6 billion. However, the companies would then be required to build new engines and cars in the US, as well as repay taxpayers before Fiat could increase its 35% stake.
GM will be given 60 days to force greater concessions out of its debt holders and other parties, as well as to find new ways of dealing with its shrinking market share.
The task force determination that Chrysler and GM's plans won't make the viable technically violates terms of the loan, and the government could ask for immediate repayment. However, the President will give them extra time to meet new goals before he decides whether to call the loans.
Comments
But what about the banks?
This Wagoner business is interesting--I certainly hope it works, yet it makes me nervous. True, the government does own a large part of GM, and that certainly gave it more of a say in this process of forcing Wagoner to resign. Yet, it still seems quite a risky move on the part of the Obama administration. Additionally, I'd like to know why there has not been more of this type of revamping/cleaning out CEOs in the AIG and banking worlds. If the Federal Government owns nearly 80 percent of AIG at this point--and it has no problem forcing GM's CEO to resign--why can it not do more with regard to those who have not done their jobs on Wall Street? I watched an interesting video on this whole ordeal at newsy.com earlier today. The video summarizes the whole Wagoner mess and gives a few different viewpoints. It's worth watching:
http://www.newsy.com/videos/obama_to_gm_ceo_step_aside/
Wagnoner with 30 yrs mgt. experience, Obama with ZERO-
I guess firing the head of General Motors must be a real coup for a power-mad narcissist like Obama- what a rush. And his Marxist-professor mentors would be SO proud-
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I'm sure his replacement Mr Fritz will be real motivated taking-on such a herculean task with the whole country looking over his shoulder, while working 15 hrs/day for a buck-a-year... then having 90% of his bonus confiscated by congress.
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And he's the current COO, how's that a change? This cheap symbolism, so typical of Obama, will likely do more harm than good.
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http://reaganiterepublicanresistance.blogspot.com
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