White House Blackmails General Motors’ CEO To Resign
In what can only be described as yet another one of those “crossing the Rubicon” moments that we’ve seen so many of since this economic crisis began, the CEO of General Motors has resigned in response to political pressure from the President of the United States:
The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.
On Monday, President Barack Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.
The White House confirmed Wagoner was leaving at the government’s behest after The Associated Press reported his immediate departure, without giving a reason.
General Motors issued a vague statement Sunday night that did not officially confirm Wagoner’s departure.
“We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement,” the company said.
The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.
The strong implication, of course, is that Wagoner’s departure was at least part of the price that General Motors must pay for additional taxpayer largesse.
Of course, as with much else of what the Obama Administration is doing, the precedent for this move was set by his Republican predecessor:
Obama’s move against Wagoner hearkens back to September 2008 when President Bush’s Treasury Secretary, Hank Paulson, insisted that AIG CEO Robert Willumstad step down as part of an $85 billion bailout of the insurance giant. Paulson installed in his place Edward Liddy, a former Allstate executive.
Much of this, of course, can be chalked up to the idea that if you talk the government’s money, you pay the price for that by agreeing to listen to it’s dictates. And, as I’ve said elsewhere many times, many American businessmen are far from being the champions of free market capitalism that their opponents on the left would like to think they are. To use the Atlas Shrugged example, they are more James Taggart than Dagny Taggart; and that fact is no better demonstrated than by the spectacle that Wagoner and his fellow auto executives made of themselves in December when they went to Congress begging to be bailed out.
Moreover, it’s absolutely true that Wagoner, and most of the other people in charge of General Motors have done a pretty good job at only one thing; ruining the company. By all rights, they should have been ousted long ago, and if the company were forced into the Chapter 11 Bankruptcy that it deserves, they’d be out as soon as the ink of the Judge’s First Day Orders was dry.
Nonetheless, there’s something shockingly wrong about this. The President of the United States has fired the Chief Executive Officer of an American corporation whose shares are held by millions of people. If the American people don’t realize that there is something horribly wrong about the precedent that this sets, then we are truly screwed.