Yash Gupta, the dean of the The Johns Hopkins Carey Business School, is crying himself a river over the ouster of General Motors CEO Rick Wagoner. Need I remind you that General Motors has lost more than $80 billion over the last four years of operation? Here’s Gupta:
This was a poor way for the president to send a message that drastic change was needed. When the government takes the enormous step of asking a top CEO to resign, there has to be an immediate explanation of how the move will prove beneficial. The president hasn’t really done that. He hasn’t articulated how things are going to be better with Rick Wagoner out and a new executive in.
Perhaps this is largely a symbolic move. Sometimes, symbolism is fine, but change for its own sake carries the risk of appearing capricious. That’s not very good for the morale of the workers, the auto dealerships, the consumers, or the markets. Also, it signals to other executives of companies that received TARP money that they’re equally vulnerable. The overall effect is a deeper mood of instability and uncertainty.
No. The overall effect is to send a message that at long last there is going to be some accountability for CEO’s that run their corporations so poorly that they put hundreds of thousands of people’s jobs at risk and require taxpayer dollars to even keep their doors open.
You want to know what hurts morale? When that beloved employee in the mailroom or the cafeteria or the payroll office gets a pink slip. And even though Wagoner won’t be receiving the typical golden parachute severance package, the game is so rigged in his favor that his retirement package alone is worth approximately $20 million. I very much doubt that any employees or dealerships are going to be confused or upset that this incompetent just lost his job. Most people will wonder why we can’t confiscate his pension and deferred compensation. After all, his company lost over $80 billion over the last four years and plans to fire almost 50,000 employees this year alone.
The Republicans’ response?
This is a major power grab by the White House on the heels of another power grab from Secretary Geithner who asked last week for the freedom to decide on his own which companies are ‘systemically’ important to our country and worthy of taxpayer investment and which are not.
In other words, this is fascism.
Obama just sent a ‘don’t fuck with me’ signal to the corporate establishment. I think they were beginning to believe that the raiding of the public trough would continue under new management. This move must be sending chills down their spine. Obama doesn’t take shit from antbody, no matter how rich they are.
As to historical precedent, this is like Reagan’s firing the air traffic controllers. In my view that was the decisive political act of his presidential career. Not saying it was good for the nation, but it solidified his posiiton as a ‘leader’, and reassured the big boys that he was on their side.
Obama just sent a ‘don’t fuck with me’ signal to the corporate establishment.Nothing could be further from the truth. He sent that message to the automakers. The rest of corporate America, specifically the financial industry, will be expecting their billions in bailout payments and trillions in no-recourse loan guarantees on time and accompanied by gourmet cheese baskets and gift cards to Williams-Sonoma.
If Obama shitcans Jamie Dimon, Vikram Pandit, Ken Lewis, and the rest of the bankster CEOs, now that would be a message.
I agree and disagree. I think it sends a message but the message is mixed. Right now, the message is that CEO’s better not need more help, regardless of what they’re running. But it is also a contrast message that leaves Obama open to the double standard criticism.
It’s about time the President sent a clear and concise message to the sharks of the industrial world. Well done! As to the Republican response, it’s amazing how far out of touch they sound each and every day. Are they on permanent assignment to that bizarro world of theirs? If so, their return to political power may be delayed by a millennium or two.
Yeah, that’s why he’s going to gut the UAW’s pension plan and shred every contract they have. Whether for past or future work. That’s why AIG gets to keep it’s bonuses and we have to pour trillions of dollars into the financial sector.
The message Obama really sent is this: He doesn’t care about the real economy, only about his wealthy friends.
So when did he say he was going to gut the pension plan?
Pensions I believe would be handled by the Pension Benefit Guaranty Corp. Which, incidentally, has also been in the news recently.
Because the Bush Administration put the savings of the fund into the stock market THIS SUMMER.
JAIL TIME.
Yes, this underlines what’s different between, say, AIG and GM. GM has unions that are being required to make drastic concessions. So ditching Wagoner reinforces to the rank-and-file that they’re not alone at the losing end.
If Wagoner’s severance package was more in line with the rank-and-file’s, I think the message would be clearer. As long as the working man goes bankrupt while management retires in luxury, there is no accountability.
Only someone who is out of touch with the concerns of the working class would say that this hurts morale. I suspect that the ordinary worker looks upon this favorably.
Wagoner himself is probably relieved.
Fascism would be starting a war on false pretenses in order to profit corporations. You know, like invading a country to gain control of their OIL industry for the benefit of oil companies.
Don’t forget that you have to wrap yourself in the flag while starting that war, and claim that “you’re either with us or against us”.
I’m not sad to see wagonner, who presided over failure, get the boot, but i’m wondering when the geniuses at AIG get fired: after all, they’ve received $180 billion, more than 10 times what GM got, and they’re STILl coming back for more.
so yeah, fired the incompetent management at GM, but let’s get cracking on AIG too. And Goldman. And bank of America.
The CEO of AIG started last September.
yeah well he hasn’t turned his company around has he? and how many months did congress give GM to turn THEIR company around?
I’m being snarky here of course, but there’s a bit of a double standard. GM gets a month or two to turn their bad business around, AIG and the rest we keep shoveling money down the toilet.
Wagoner has been at GM for almost a decade. He didn’t make all of the bad decisions that have led to GM begging for taxpayer money, but he made enough of them to be a big part of the problem. His consistent attitude of sticking his fingers in his ears and saying “la-la-la I can’t HEEEAR YOU” for YEARS while GM was locking themselves into stupid technology decisions certainly hasn’t helped the company at all, and you only need to look at Ford to see that GM could have made better decisions over this last decade and not be in quite as bad a mess as they are now.
The CEO of AIG, on the other hand, is the person that the government essentially put into place to deal with the problems of AIG. He may well be part of the problem, but he hasn’t had 9 years to turn the company around. Come back to me with a torch once he’s had at least a year to at least try to do something – no one can move into a swamp like that, snap their fingers and turn everything around instantly. (Except maybe Steve Jobs, but only if the swamp is Apple.)
(The CEO of BoA, OTOH, should be stepping down. As should a number of other upper-management types at these companies. But the AIG comparison just isn’t workable in this case.)
I know you’re being snarky, but it would be better to talk about the CEO’s of Bank of America or Citigroup or some other entity that has the same leadership that led them into insolvency. AIG is a poor example for comparison to GM. Both companies lost their CEO’s.
point made and point taken.
so when does ken lewis get fired?
I never liked his smug attitude. I wouldn’t mind seeing him unemployed.
One thing I’d really like to know is how much of the money we gave him was to provide liquidity for lending (and could presumably be taken back and refocused somewhere else for the same purpose) and how much was to keep them afloat.
That is one major difference between the auto industry and the credit industry, and it doesn’t get enough attention. If I were president, I’d order a whole new fleet of government automobiles that are either electric or hybrid and give them like 3 or 4 years to come up with the models and make them. The idea would be that the next generation of vehicles would be subsidized and expedited by the assurance of a massive purchase order. That would be the equivalent of giving the banks money not because they need it but because we need them to lend it to other people.
“If I were president, I’d order a whole new fleet of government automobiles that are either electric or hybrid and give them like 3 or 4 years to come up with the models and make them. The idea would be that the next generation of vehicles would be subsidized and expedited by the assurance of a massive purchase order.”
agreed wholeheartedly. and wasn’t obama just talking about this a few months ago, when he lambasted the GOp over the stimulus:
sure would be a creative and effective way to bail out the big three, create jobs, and transition to a sensible energy policy.
there is a reason I like and defend the guy.
and if it happens i will be the first to praise him.
So we paid off the BOA credit card, the full balance as shown on the latest statement. The following month brought a statement requiring more money. It wasn’t activity on the account; we haven’t used the card in months. We figured it was interest on the previous balance that accrued during the time we got the last statement and paid it off. Okay, we paid that.
This month’s statement is hysterical: They gave me a CREDIT of 50 cents due to a “Finance Charge Error Correction” and for that small compensation they want a “Minimum Finance Charge” of $1.50. So they claim, I now owe them $1.00. The “Annual Percentage Rate for this Billing Period” actually says, in bold print, “124.53%”! Say wuh? You gave me 50 cents therefore I owe you a dollar fifty?
Maybe today I’ll find the time to sit on eterna-hold and ask them if they really truly want me to send them one hundred pennies taped to their statement. Or if they’re going to charge me another buck fifty to accept the coins. We were kinda thinking we’d hold onto the card for emergency’s sake. But, if the only way I get a zero balance is cutting the card into tiny pieces and gluing them to the pennies, so be it.
Take your business elsewhere. Don’t give them two strikes. One is sufficient these days.
That is too funny. I think you should call them and tell them this is so ridiculous that you’ll cancel the card if they don’t just waive their $1.50 fee. If you were thinking about canceling the card anyway…
what’s funny is that when I started reading this comment I thought it was an allegory and the ‘we’ was the taxpayer bailing out BOA. It took me a few sentences to realize it was you dealing with your credit card for real.
l think they got it:
Hard Line on Auto Aid Puts Bailed-Out Firms on Notice
GM Ouster and Bankruptcy Warning Resonate at Banks.