Instead of granting GM’s request for up to $30 billion in loans, the administration will provide only enough money to keep it going for the next 60 days while it develops an even more sweeping restructuring plan under new leadership.
The government is expected to demand tough concessions from union workers and bond holders.
GM CEO Rick Wagoner, who met on Friday with the task force, was forced out yesterday at the request of Rattner, an official said.
Fritz Henderson, GM’s president and chief operating officer, is the new CEO, a Treasury source said. Board member Kent Kresa, the former chairman of defense contractor Northrop Grumman Corp., is interim chairman of GM’s board.
Plans were underway to replace most of GM’s directors in the coming months.
It’s nationalisation, and semantic games won’t change that. We’re developing the American version of British Leyland, which I predicted in the wake of our elections last November. As I said then:
Since many of us have discovered Obama’s socialist appeal, let’s start things off right by proposing that he test drive such an idea on an industry that is in desperate straits: the auto industry. He could start by replicating the British solution to the problem: consolidating the American auto companies into one conglomerate, like the UK did with British Leyland back in the 1960’s and 1970’s.
That was my attempt at humour, but evidently someone up in the terrestrial hierarchy took is seriously. But I guess I knew that:
This rather “tongue in cheek” exhortation would be funny except that a) there are probably people in the Obama transition team considering it and b) the American auto industry is probably headed for the same fate as its British counterpart. In addition to producing cars that people either don’t want and/or can’t afford, the trade unions–the scourge of both UK and US car industries–have saddled their companies with long-term obligations to pensioned employees they can’t afford. It’s true that it’s the result of an era when it was easier to give into the trade unions rather than fight them, but an administration that is (on paper at least) committed to “card check” is in no position to gracefully reverse these obligations. The inevitable result is that we are about to enter an exercise in futility whose result is all too predictable.