Obama's GM job

Daniel Howe:


The issue is principle and the lengthening arm of government into commerce. How can corporate governance and the fiduciary responsibility of directors to shareholders be so easily usurped to satisfy the political exigencies of the day? Stunning is too mild a word to describe the precedent set here.

"Certainly they have a large investment in General Motors," says spokesman Steve Harris, referring to the $13.4 billion-and-counting federal lifeline to GM. "We certainly knew that would involve a certain amount of oversight and involvement of government in our activities."

They just didn't know how much. Not since World War II, with the arguable exception of President Harry S. Truman's brief control of the steel industry, has a president exercised such forceful unilateral control over firms in the private sector. And the double-standards? Towering, as if that makes any difference.

What does it say that on the same day President Obama made nice at the White House with the nation's leading bank CEOs -- none of whom have lost their jobs despite sitting on vastly larger sums of taxpayer dough -- the head of the president's auto task force was urging Wagoner to "step aside?"

"There is no standard," Rep. Thaddeus McCotter, R-Livonia, told me. "You cannot look at what happened to Rick Wagoner and draw any policy certitude about what happened to the Wall Street CEOs. How do you reconcile the two images on Friday?"

You don't because you can't.

One of the ways the banks are different is their workforce is not holding them hostage. But the biggest difference is that the loans to the banks are a conduit to borrowers who have good credit and should be able to repay them and use the money to keep their businesses operating. GM and Chrysler can give no such assurances. If they could, they would be borrowing their money from those banks who have gotten money from the government. Because of the economies of scale, there is no assurances that there are enough buyers right now to make these companies profitable enough to pay back their government loans.

I think the companies would have been better off going through bankruptcy. It is ironic, that they would have had more control over their destiny if they had done that last year.


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