When Obama took it on himself to fire GM CEO Rick Wagnoner, this is how it went down, according to someone who ought to know:
“The president said he had decided to do that. He wasn’t asking for opinions,” said U.S. Sen Carl Levin, a Michigan democrat. “There wasn’t much point in arguing whether it was fair or unfair, wise or unwise.”
Curious, isn’t it, coming from a president whose big skill was supposed to be his ability to dialogue with both sides and to hear them out? And remember, this is a man from Obama’s own party speaking, one who should have had something to say on the matter of the auto industry. After all, he’s not only the Senator from the state most deeply involved, Michigan, (and has held that office for a very long time), but he’s a liberal Democrat as well.
But it seems that the King has spoken, and it’s off with Wagoner’s head—metaphorically, that is. No questions asked.
Wagoner himself was blindsided, according to the Reuters article. It had been a few months since the cries for his resignation had been heard last fall and they had died down, although Wagoner had to have known his days were numbered. But the word that he was through came with great suddenness, at a meeting where he was presenting a plan to restructure GM to the Obama administration’s auto task force.
We all know that President Obama has no experience of business in general or the auto industry in particular, and virtually no management or executive background either. But what about the members of this shadowy “auto task force”? Surely they must have had something to do with the auto industry, right?
I didn’t find too much about them when I looked just now—except for this, which was written a week ago, before the Wagoner firing. Somehow, it’s no surprise to learn the following (note: as someone not registered with the WSJ, I can’t seem to access the WSJ article referred to here; no link to it is given, either):
A large part of the [WSJ] article is given over to a discussion of the absence of industry expertise among the members of the auto industry team.
In session after session in a warren of offices at the Treasury Department, the team has sat through tutorials on dealer financing, studied basic data and debated the future of U.S. car sales. They have spent days trying to understand the complexities of the hundreds of companies that supply the car companies with axles, seats and other parts.
Steven Rattner, a former journalist-turned-investment banker, was picked last month to head the team…[he says] “[W]e’ve learned a lot about how car dealers work, and how companies get paid when they sell a car to a dealer, and why there are a certain number of dealers more than are optimal. Have we learned everything? Of course not, but I think we are learning what we need to learn to do this job.”
Disquieting isn’t it. I can’t fault the members for trying to get their hands around the industry whose future they are deciding but I don’t understand why a few people with real industry expertise aren’t integral members of the panel. It’s one thing to get a crash course and quite another to apply the lessons in a cogent manner.
“Disquieting?” I’ll say. Oh, but of course this task force has learned in a month all they need to do the job. Much more than Mr. Wagoner, who had been in the auto industry for thirty-two years.
But what the hey, they’re smart guys, aren’t they? Smart people can cram for tests and learn enough to get an “A,” right?
Oh, and there’s another little detail that hasn’t gotten much attention: not only is Wagoner gone, but “a majority of GM’s board will also be replaced.” Oh, why not? Send them to all the Bastille.
Let’s learn some more about how the Obama auto task force has been operating:
The task force met with a committee representing GM’s bondholders on the same day it met with Fiat executives…The bondholders’ attorneys laid out the details of a plan to exchange debt for equity, which would reduce pressure on GM to repay the bondholders. As the lawyers walked through a litany of potential challenges, Messrs. Rattner and Bloom took notes, offering minimal commentary, according to people who attended the meeting. Since then, the bondholders committee has had little contact with the task force. Its lawyers say they were surprised two weeks later when Mr. Rattner publicly criticized them for not being flexible enough.
Mr. Rattner and the Treasury Department haven’t responded to requests for comment on the complaints by bondholders.
I can see a pattern starting to emerge, and it’s not a pretty one. This post isn’t about whether Wagnoner needed to go or not. I’ve read opinions on both sides; I really don’t know. It’s about the process by which that happened and Obama’s imperial style, and really astounding hubris.
This is the slippery slope on which businesses place themselves when they accept a bailout. Of course, in the case of GM, it seemed to be that or bankruptcy. But when you sell your soul to the government, the government becomes a dictator.
And we all know how well government is at managing businesses. Probably a good sight worse than Rick Wagoner and the Board of GM, despite those government task force wizards.
It is merely simple common sense to think that the task force should have been composed mainly of people with auto industry experience. But all of them seem to be too tainted to be considered by the Obama administration—tainted, that is, by the actual reality of doing business, and the inevitable compromises and hard decisions that need to be made.
This is part of a pattern I’ve noticed in the Obama administration, that of distrusting those with hands-on experience in a given field in favor of smarty-pants generalists with no track record—such as Obama himself.
[NOTE: Here’s task force head Rattner’s bio, from the NY Times:
Mr. Rattner started his career as a financial reporter for The New York Times. He has been active in New York’s Democratic Party, holding a variety of fund-raisers for candidates; he originally backed Hillary Clinton for president. Mr. Rattner’s wife, Maureen White, was a co-chairwoman of finance for Mrs. Clinton’s campaign.
He previously worked at Lehman Brothers, Morgan Stanley and Lazard as a mergers and acquisitions specialist.
So we have a dedicated Democrat (not that there’s anything wrong with that), a journalist (ditto, I’m sure), and a Wall Street money guy. Great background for his present job, don’t you think? Note also, in the comments section of the Times article, which appeared in late February, that at least the readers note the lack of auto industry (or any other industry) experience, even if Obama doesn’t.]
[ADDENDUM: I finally was able to locate the WSJ article. Here is some information on other task force members:
The team’s industrial expertise comes from Ron Bloom, a scrappy Harvard Business School graduate who gave up investment banking in 1996 to work as a top adviser to the United Steelworkers union…
Several team members, such as Brian Deese, a 31-year-old former Obama campaign aide, are on loan from the White House’s National Economic Council. Three others specialize in climate change. The rest come from agencies such as the Energy and Labor departments. Backing them up are about 30 accountants and advisers.
Great. Just great. Thirty-one-year old. Specialists in climate change.
There’s more, if you’ve got the stomach for it:
People on the Fiat team came away [from a meeting with the task force] thinking that the task force’s questions betrayed a limited understanding of the industry. “It’s fair to say we walked out of the meeting and were a little unsettled,” says one member of the Fiat team…
Several auto experts who’ve met with the panel say they’ve been struck by the group’s focus on trying to determine exactly when car sales will rebound. “They are absolutely concerned with the short-term, so it’s hard to see them grasping the medium or longer-term issues,” says Daniel Roos, an automotive expert at the Massachusetts Institute of Technology, who briefed the team in Washington on March 6.]