Rick Wagoner, CEO of GM, is asked by White House to resign

Rick Wagoner is resigning his post at General Motors as CEO at the request of the White House. His resignation was evidently one of the "strings" attached to the terms of the new aid package the administration is offering to the beleaguered auto manufacturer.

Here is the story from the Politico.

GM CEO resigns at Obama's behest

The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.

Wagoner’s resignation was one of the remarkable strings attached to the new aid package the administration is offering GM, 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.

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.

Wagoner has been CEO for 8 years and at GM for more than 30. The company has not said who will replace him. GM has received $13.4 billion in government aid, and has been seeking $16.6 billion more.

On Monday, President Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler.

Industry sources had said the White House planned very tough medicine, which turned out to be an understatement. And it went to the very top. The measures to be imposed by the government will have a dramatic effect on workers, unions, suppliers, retirees and the communities where plants are located, the sources said.

GM and Chrysler have to prove their viability as a condition of a federal bailout released under former President George W. Bush, and both have asked the current administration for more money.

Obama said Friday in an interview with CBS’s “Face the Nation,” broadcast Sunday, that the carmakers were going to have to do more.

“There's been some serious efforts to deal with a combination of long-standing problems in the auto industry,” the president told host Bob Schieffer. “What we're trying to let them know is that we want to have a successful auto industry, U.S. auto industry. We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is.

“And that's gonna mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody's gonna have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road."

Schieffer followed up: “But they're not there yet.”

Obama added: “They're not there yet.”

The administration calls the task force “a cabinet-level group that includes the secretaries of Transportation, Commerce, Labor and Energy. It will also include the chairman of the President’s Council of Economic Advisers, the director of the Office of Management and Budget, the EPA administrator, and the director of the White House Office of Energy and Climate Change. The Task Force will be led by Treasury Secretary [Tim] Geithner and [National Economic Council] Director Larry Summers.”

The panel’s chief adviser is Steven Rattner, a well-known investment banker and former New York Times reporter.

And people were worrying about the Obama Administration nationalizing businesses. What would ever make anyone worry about that?

Related Articles:

New York Times-G.M. Chief Is Said to Be Resigning in Deal With U.S.

Associated Press-GM CEO Wagoner to step down at White House request

Update:

This video is from CBS's Face the Nation. First few minutes are Obama's explaination of how the auto companies haven't done enough. Almost, but not quite. Interpretation, "We haven't gotten Rick Wagoner's head on a lance, yet." "Once we get that then you will get your money."


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For the record, we oppose bailing out companies in anyway, shape, or form. Nevertheless, we oppose the federal government telling them who they can hire and fire, even more. This spiral downward does not seem to have any end in sight.