Bailout, Government Action, Hot News, News, President Obama, Trends, Wall Street

GM and Chrysler’s New Non-Executive Chairman? B. Obama Takes Action

Granted in part it was George Bush who punted just a bit. When he gave the first TARP money to GM and Chrysler (Ford didn’t ask for and has not received any bailout funds), Bush gave them until the end of March to submit a viable plan for reorganization as a condition to future funding, knowing it would be Pres. Obama who would have to deal with it.

Now that those plans are in, the Obama Administration apparently decided they are insufficient. They have called for, and received, the resignation of Rick Wagoner, CEO of GM. They have also said that they are giving Chrysler only 30 more days of funding, and believe that Chrysler probably won’t make it as a stand-alone business (they think they should merge with Fiat). They are also suggesting, as I have in the past on our companion blog (www.reversemergerblog.com), that bankruptcy reorganization probably makes the best sense for both of them. Wagoner had previously claimed that if GM went bankrupt it would have to go out of business. It seems that both Pres. Obama and I agree that this would not be the case.

I have very mixed feelings here. The “tough love” approach for the car companies has been something needed and I believe is right. At the same time, the extent of government involvement, oversight and second guessing is scary. The fact that a 47-year old politician with no experience running any business, despite his many masterful skills, is making key management decisions for two of America’s largest companies is totally unprecedented and may be only just the beginning of Obama’s activist approach to dealing with companies that have received TARP or other bailout money. Let’s just hope he brings good sense and gets really good advice. And gets out of the business of business as soon as humanly possible.