Obama Moves GM and Chrysler Towards Bankruptcy

Let me start by saying I’m non-plussed by the call for Rick Wagoner’s head. I think Wagoner was making the right moves recently, but he was also responsible for years of inaction. So I’m not sorry to see him gone. In any case, Obama is forcing out the entire board of GM, so Wagoner would have had to go anyway.

That said, here’s what Obama seems to be announcing today:

  • Chrysler will be forced into a marriage with Fiat in the next month or be denied any additional aid–which will surely put it into bankruptcy
  • GM (which failed to get the required concessions from the UAW and bond-holders) will have 60 days to come up with a new, more aggressive turn-around plan
  • At the end of 60 days, the government may require a "quick rinse" bankruptcy (one month) to get GM’s stakeholders to take their losses

Thus far, it’s tough to tell whether this is a good plan or not. As far as Chrysler, they can’t survive alone. So the forced marriage gives it one chance to avoid bankruptcy that otherwise seems inevitable. I don’t think Fiat will take the deal, so I expect Chrysler to enter bankruptcy within the next month.

As for the GM plan, they are finally talking about dealer concessions (which a "quick rinse" bankruptcy would help, too), which was the element that everyone had thus far ignored. And some of this tough love with GM seems to be a logical next step given bond-holders’ intransigence since December. GM had been, thus far, unable to get its bond-holders to accept the losses they had told GM, in November, they would take, so Obama is threatening to use a court to make them do so–followed by UAW concessions.

Which leaves me with these questions, for now:

  • When is Obama going to restructure Citi and AIG this radically?
  • To what extent was the last minute Bush deal with Cerberus in December (which allowed GMAC to shed its mortgage-related debt and become a TARP recipient) responsible for the bond-holders intransigence?
  • Will we see any reporting about the sanctity of contracts today, purportedly the excuse for not withholding the AIG bonuses? AIG’s CDS counter-parties are the exact equivalent of the GM bond-holders; on Thursday Geithner talked about the importance of AIG meeting its obligations. And UAW’s workers are the equivalent of AIG’s bonus recipients except the former didn’t screw up the company. 
  • Will Obama recognize the irony of allowing GM to renege on its health care promises to a bunch of line workers, even while Obama demands a national health care plan? Will he recognize that his own plan needs to go further to eliminate the huge competitive disadvantage GM faces in the production of small economic cars (that Japan can make them with labor that gets free healthcare)? Will he allow the insurance companies to prevent a real fix for health care while dismantling the rest of US manufacturing because of health care?

Update, from the restructuring plan:

General Motors: While GM’s current plan is not viable, the Administration is confident that with a more fundamental restructuring, GM will emerge from this process as a stronger more competitive business. This process will include leadership changes at GM and an increased effort by the U.S. Treasury and outside advisors to assist with the company’s restructuring effort. Rick Wagoner is stepping aside as Chairman and CEO. In this context, the Administration will provide GM with working capital for 60 days to develop a more aggressive restructuring plan and a credible strategy to implement such a plan. The Administration will stand behind GM’s restructuring effort.

Chrysler: After extensive consultation with financial and industry experts, the Administration has reluctantly concluded that Chrysler is not viable as a stand-alone company. However, Chrysler has reached an understanding with Fiat that could be the basis of a path to viability. Fiat is prepared to transfer valuable technology to Chrysler and, after extensive consultation with the Administration, has committed to building new fuel efficient cars and engines in U.S. factories. At the same time, however, there are substantial hurdles to overcome before this deal can become a reality. Therefore, the Administration will provide Chrysler with working capital for 30 days to conclude a definitive agreement with Fiat and secure the support of necessary stakeholders. If successful, the government will consider investing up to the additional $6 billion requested by Chrysler to help this partnership succeed. If an agreement is not reached, the government will not invest any additional taxpayer funds in Chrysler.

[snip]

Appointment of a Director of Auto Recovery: The Administration also announced that Edward Montgomery, a top labor economist and former Deputy Secretary of Labor, will serve as Director of Recovery for Auto Workers and Communities. Dr. Montgomery will work to leverage all resources of government to support the workers, communities and regions that rely on the American auto industry.

All that seems to make sense. I’m trying to see whether Montgomery has more experience than Steven Rattner in automotive (he’s got more manufacturing experience, so that’s already a plus). But thus far, this all makes sense.  

Update: Obama had nothing substantive to add in his presentation–he laid out why they’re taking this route and announced the appointment of Montgomery (and said he’d work with Secretary Solis). 

He did, however, hit all the right notes, talking about how the auto industry had helped the US win WWII and could do it again. 

In other news, here are the assessments of the GM and Chrysler plans.  They strike me as eminently reasonable assessments. My biggest complaint, thus far, is that the Administration does not mention "health care" in either of the assessments. They mention legacy costs, but not health care. So thus far, they seem unprepared to deal with the fundamental competitive disadvantage that we’re asking our manufacturing companies to shoulder.

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85 replies
  1. Rayne says:

    What does one give as a present at a shot-gun wedding anyhow?

    I suspect all the puling by bondholders over the last two weeks was the last straw; bondholders now have Wagoner’s head on a pike to show for their whining.

  2. emptywheel says:

    Eh, I don’t know if they get credit. I can see the Obama White House wanting to take out Wagoner in the absence of understanding why decisions about fuel efficiency got made the way they did.

  3. wavpeac says:

    All I know is that my loan still has all the lies it had before and that the ads for GMAC’s mortgage division have been running like crazy.Why the ads, almost constant. Even my husband noticed.

    They appear “fearless” to me. There seems to be absolutely “no change” in the way they are handling business. You still can’t get through, you still have brand new posts about people’s escrow accounts, bad statements, misapplied payments. Nothing from the government to intervene or stop it.

    It’s the one part of this story (small that it is) that the average american COULD understand were it being told. But it is not being told or uncovered or investigated. Even the show on banking on sunday night avoided that topic of “fraud”. Out and out theft is just not being discussed or identified, but it’s continuing.

    I can’t figure out how it’s all connected for sure…but it is connected. The thread is the blatant law breaking and the complete breakdown of enforcement as well as the news black out. That’s what is shared on the top end, and the bottom end of this horrible mess.

  4. BAmer says:

    The public, for whatever reason, is overwhelmingly opposed to assisting the automakers. So, Obama needs to be very tough w/ any of them getting aid. Pure politics here.

    Let’s just hope the economy turns around soon so that Ford doesn’t have to go through this too.

    • bmaz says:

      Well, the public is overwhelmingly against the wholesale bonus bailouts on Wall Street too, and the duplicitous Obama team clucked and flapped their lips about the sanctity of contracts and importance of key personnel there didn’t they? Of course they did. So, this really isn not about public pressure at all.

      • Leen says:

        What “public” Not the folks I hear calling into C-Span’s Washington Journal. In fact folks (as Bmaz points out)who call in to that program seem to be damned pissed off at the double standards being applied between the Wall street bailouts and the auto maker bailouts.

        Just who is the “public” that you refer to?

        Also the old GM retirees and other union retirees in the nursing homes that I have had the pleasure of spending a great deal of time with the last year and a half sure support at bailout with obviously needed changes.

        Just who and where is this “public” that do not support an auto bailout live

  5. joejoejoe says:

    Doesn’t Fiat want the deal with Chrysler in order to sell cars in the USA? Or does the way the auto industry is shaking out make it worth it for them to wait and pick up the capacity and dealers they want at bargain rates, not as part of a merger with Chrysler.

    • bmaz says:

      Who the heck is gonna buy any of these shitty little cars? They might as well just merge with fucking Yugo. This is just stupid.

      • joejoejoe says:

        The Fiat 500 has a 5-star Euro safety rating is a cool little car like the Mini. I’d consider buying a Fiat-designed Chrysler built in the US by UAW workers. They have a range of other small cars and efficient engines too.

        • emptywheel says:

          I agree–that bmav platform (or it may be amav) is what Fiat has to offer. And they’d be immediately competitive with the Fits and Versas that are selling like hotcakes (this segment is the fastest growing segment in Europe right now, and bc they’re designed for adults, they get better margins than normal compacts).

          Problem is, I’m not sure where you build them to be competitive with Fit and Versa on labor costs–you’re either paying Italian or US union worker wages. That may not matter if the Yen remains high, though, in which case it MIGHT (emphasis on MIGHT) work.

          • emptywheel says:

            And incidentally, Obama said they’d put $6 billion into making this happen. Back in October, GM and CHrysler were talking about $10 billion to buy Chrysler. That $6 billion might sweeten the pot enough for Fiat.

      • klynn says:

        Well, I would not mind driving an Alfa Romeo or a Maserati…

        And…

        Fiat Group owns CNH Global (which includes Case Construction, Case IH, Flexi-Coil, Kobelco, New Holland, New Holland Construction, and Steyr); and Fiat-Hitachi Construction. CNH is the second largest agricultural equipment manufacturer in the world after Deere & Company. It is also the third largest producer of construction equipment after Caterpillar Inc. and Komatsu. CNH accounts for around 20% of revenues.[5] CNH is the most prized company inside Fiat because it has driven growth and is very profitable. It also shows great promise for growth in third-world markets.

        If all the infrstructure work gets moving in this country, my guess is this unit might be quite helpful to Chrysler.

          • bmaz says:

            You know why Ferrari makes good cars? Because Fiat keeps their clumsy hands off of Maranello, that’s why. Want to know why Maserati started making halfway decent cars again? Because Ferrari was in complete control of them up until about two years ago and revamped the company. Give them a few more years under direct control by Fiat, which the recently became. and they will be totally fucked up again like they were in the 80s and 90s. Go find any Fiat you can find, if you can even find one, that was legally imported into the US by Fiat. go drive it, if it even runs, and get back to me.

            • Petrocelli says:

              At one time, a ME Dictator had a sizeable stake in Fiat.

              Was it Libya, Iran or Iraq and do you know if this is still the case ?

            • klynn says:

              Hey bmaz,

              Let me put my comments in context. A close friend worked for Ferrari and now works for Chrysler. I just want this friend to have a job at the end of the day and the family to have a roof over their heads and food on the table — along with all of their friends who work for the same company. This family has been through a great deal of life challenges and they manage to keep a positive attitude, walk in grace and care about others around them. This is a good person, a hard working person and an extremely creative person with a number of patents too.

              My comments are biased, honestly.

              I am too close to this one to really argue business model and product.

              Nardelli is also calling on his Case Construction Equipment manufacturing VP and Gen Manager days in building this partnership.

        • BoxTurtle says:

          So what fiat has going for them is a number of high dollar, low MPG, speciality sportscars. NOT what we need here in American.

          Boxturtle (Last Maserati I saw got 10 MPG accoering to the window sticker)

          • klynn says:

            I was appealing to bmaz’s car affection…

            Actually, they make some very affordable diesel cars (more affordable than VW and Mercedes Benz) and promote the production of biodiesel.

      • BoxTurtle says:

        I’m with you here. Fiat has no almost market in the US (when was the last time you saw one on the road?) and their designs are nothing special. Chrysler is only a shell at this point.

        The one thing that might make this work is that Fiat is a complete unknown to most Americans, thus a well crafted advertising campaign could create whatever image they wanted. But I’m not hopeful.

        Market appears to be taking Obama seriously. Down 258 last I looked, and I’ll bet it’s the GM/Cerberus bondholders that are taking the worst of that beating. As it should be.

        Boxturtle (National health care is going to HAVE to be part of any plan to save GM)

        • barbara says:

          On the surface of it (she said cautiously), the marketing campaign of…oh, rats, who is it?…Hyundai?…seems brilliant. The “drive it for a year and if you can’t make it financially, we’ll take it back” dealie. Have never seen the fine print, but it seems like an absolutely perfect marketing ploy for these times.

      • Blub says:

        How about the Sungri Motor Company of North Korea, manufacturers of the world class Jaju and Sataibaik models (which both resemble oversized 1950s jeep-like vehicles)? I don’t believe their factories have been retooled since the ’50s.

        • eCAHNomics says:

          At first blush there would seem to be a couple of advantages: capital costs would be low, and the product would fit in with the retro trend.

          • Blub says:

            it’ll suit the rethugs too. I suspect that Sungri’s workers haven’t been paid in any currency other than, say, rice, since the mid-1990s.

              • Blub says:

                I’m kinda surprised some wingnut or other hasn’t actually suggested that we need to replace the UAW with prison labor.

                  • Blub says:

                    point taken. I’m sure Corker’s staff is working out the numbers for the GOP “budget” proposal as we speak. Well, let’s see, Unicorp will provide healthcare on the tax-payer’s nickel, and pay will be reduced to $0.30 per hour for 12 hour shifts. No holidays or weekends (unless you count time off for solitary, when the workers get uppity).

    • emptywheel says:

      Yeah. Plus sell Chrysler in Europe. I think they’re reasonably compatible companies. Problem is, they’re both mediocre companies in their markets, so it’s not clear they’d be any more competitive in individual segments in either market.

  6. Minnesotachuck says:

    Simon Johnson, former IMF chief economist, has an article in the forthcoming May Atlantic in which he describes the sort of financial system enema the IMF would prescribe for America’s situation. I’m no expert in these matters but my recollections based on observations from a distance and through the lenses of the media is that the IMF nostrums typically hit the people down the food chain much harder than they do the elites at the top, as Johnson asserts. Krugman also refers to Johnson’s piece in his column today.

  7. earlofhuntingdon says:

    Sixty days “more” time to develop a restructuring plan, for a company the size and complexity of GM, is a few seconds. It allows for little beyond putting up a for sale sign. It gives GM no leverage with those it will be negotiating with, all of whom should be negotiating simultaneously with the US government in order to know whether GM could keep any promises it makes, or whether they will all be thrown in the bankruptcy blender.

    This is Teddy Roosevelt’s big stick “diplomacy”, minus the walking softly part – exactly the opposite of the kid gloves treatment handed out to Wall Street. What gives? Is it because GM is considered an old-line, union heavy, Midwestern manufacturing entity we can do without (unlike the essential East Coast Masters of the [Beltway] Universe)?

    Does this relate to preferred conditions the Chinese – along with the Saudis, the principal foreign holders of US government debt – seek as part of a strategy to acquire through SAIC all or selected bits of GM? The USG often supports US companies in foreign dealings, though rarely on as integrated a basis as routinely happens in Europe and East Asia. (Oil everywhere, and mining, fruit and tobacco company operations in Latin America seem notable exceptions.)

    A planful restructuring would not give GM or any other company so short a time limit unless a detailed cooperation plan had already been worked out. Instead, a planful restructuring under government supervision but outside of bankruptcy would involve constant interplay with government representatives and opposing parties. It would take place over a longer period of time and involve pre-agreed levels of support, tied to a series of “if, then” commitments.

    This plan looks like Team Obama has given GM a choice: figure out how to change a flat tire while staying inside the car, or get out and change it with only a stapler.

    • emptywheel says:

      I’m pretty sure the USG will back GM beyond the 60 days. At 60 days, they put it into bankruptcy and inflict the pain everyone knows is coming: quick closure of 30% or more of their dealers, halvsies on the bond holders, and some gimmick to get VEBA off GM’s books. With guarantees going forward.

      So I’ve got few reservations about what they’ve done with GM (and I think pushing Chrysler into probable bankruptcy is the right thing to do too). I just wish they had used the same tough love on Wall Street.

      • earlofhuntingdon says:

        The bankruptcy filing would be the execution phase, the mechanism through which concessions are legally crammed down. What’s not clear are the plans and how complete they are, and what form that continued backing will take.

        Given the money involved, Congress would have to agree to come up with it. What did they agree to? If they haven’t already, what’s at risk if getting that agreement is delayed or held hostage to the GOP’s boycott-style politics or an intervening event, such as a Supreme Court nomination?

        I agree that Chrysler has no future as an independent. GM may, but it seems more likely to be broken up, with Europe going independent and a “merger of equals” with someone for the remainder of GM. As you point out, the major stakeholders for GM and Chrysler, besides unions, shareholders and management, are their current lenders.

      • Minnesotachuck says:

        I just wish they had used the same tough love on Wall Street.

        In the forthcoming Simon Johnson piece in The Atlantic I linked to above, he makes plain why they didn’t:

        Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

        In short, a 30 year of infusion into the American public of ReagonomicsVoodoo Economics ideology, reinforced by campaign contributions.

      • crack says:

        Who is the biggest net seller of CDS protection on GM? I’m sure the intransigent bond holder’s have CDS on their bonds and their worry is counterparty risk on the CDS, not the GM default. If it’s AIG why doesn’t AIG just buy GM (GM’s market cap is 2 billion, a rounding error compared to the debt outstanding)? Then the Gov can run both companies and possibly avoid having to pay out the GM CDSs.

  8. BayStateLibrul says:

    Most decisive speech, I’ve heard.
    Imagine if Bushie was prez…
    I always thought that Bush/Paulson fucked up the bank shit and
    Obama was caught in the middle… (my bias).
    If Obama was Prez when the banks hit the skids… a very different
    outcome….

    • Minnesotachuck says:

      Obama was caught in the middle… (my bias).
      If Obama was Prez when the banks hit the skids… a very different
      outcome….

      I find it hard to fully buy this. Obama didn’t have to populate all the top econ posts in his administration with the same foxes who were complicit in tipping over the Wall Street chicken coop.

  9. pseudonymousinnc says:

    Quick thoughts: the automakers are hamstrung by having a business model that’s vaguely comprehensible to the layman: you make cars, you sell cars, you finance car sales, you service cars. They also didn’t fuck up on the astronomical scale as the banksters with their magic money that exists in a realm of pure abstraction.

    The big point about FIAT is that it has the global presence and reach that the Chrysler marque does not. Chrysler makes disappointing rental cars for tourists. FIAT makes cars that sell around the world: they’re low-end, but they’re “secretary cars” or “first job cars”. There’s nothing to make Chrysler-badged cars marketable in Europe.

    Question re: FIAT-Chrysler, though — the 500 shares a platform and some other stuff with the Ford Ka (nice entry-level model), so won’t Ford have first dibs, or at least some say in who puts out cars on that platform in the US?

    (The 500 and Ka are both assembled in Poland, which doesn’t really translate to US production lines, given that the German-made Fiesta is going to be built in Mexico for the US market.)

  10. orionATL says:

    one thing does puzzle me about this.

    why did the administration fire wagoner (and the gm board) at this time?

    doing so would seem to impose two large additional burdens on a company facing imminent financial death – who leads the company and who makes binding legal decisions.

    bad leaders these folk no doubt are, prima facie,

    but now gm has 60 days to come up with an acceptable “save me, jesus” prayer AND it must do so without leadership at the top.

    maybe corps(es) like gm do better when leaderless.

    • emptywheel says:

      For now, GM is being led by Fritz Hnderson, who has been very close with Wagoner and will basically be able to continue the restructuring that has already started (those who are jumping up and down about this firing are making WAY MORE then they should be about Wagoner’s incompetence and about this being a break). But I do think a new board makes sense–note they did this with Citi, too.

  11. bell says:

    emptywheel quote “When is Obama going to restructure Citi and AIG this radically?” just remember who is giving the advice and their is your answer…

    • barbara says:

      Bad answer. The proletariat needs to turn up the heat faster than the frog can acclimate to it. I’m willing to cut Obama some slack. Unwilling to cut AIG (Assholes in Guccis), Citi et al another scintilla of slack. Yeah, I know. So what?!

  12. BooRadley says:

    WSJ:

    Chrysler said on Monday that it has reached an agreement on a global alliance with Italy’s Fiat with the help of the U.S. Treasury. The Obama administration’s auto task force had said it would not give Chrysler further aid if it did not finalize its tentative alliance with Fiat.

    • joejoejoe says:

      I, for one, support our new Italian overlords.

      I hope they put a bunch of Americans to work at good wages building these and these and everything in between.

    • BooRadley says:

      From the WSJ

      Chrysler clarified its Monday statement on its Fiat alliance talks, saying it has agreed to a “framework” of a global alliance with the Italian auto maker, not a deal. Chrysler said it still has “substantial hurdles to resolve,” but is committed to working to secure the support of necessary stakeholders.

      • 1970cs says:

        What nobody wants is Chrysler’s finance division, I’m guessing on a Friday afternoon sometime in the near future it will be released that the U.S. taxpayers will be the proud new owners of it. While Fiat will get the manufacturing part.

        Chrysler had a huge cash reserve locked up in it’s union pension fund which is why Cerebus wanted their hands on Chrysler in the first place. Odds are that the pension fund cash will somehow disappear with some Madoff style auditing and accounting.

  13. joejoejoe says:

    Any word on how Canada plays into this whole auto bailout thing?

    I read Canada PM Stephen Harper saying that Canada is on-board for 20% of the costs of any future plans because 20% of Chrysler & GM are in Canada. I’m not sure if that’s just talk or what but Canada has a role to play here.

    • Petrocelli says:

      Canada has been forthcoming with lots of incentives to the Big 2.5.

      The problem has always been that they get the $$$ and then renege on their half of the bargain, with no backlash from the Canadian Gov’t.

      Marcy, I totally agree on the accountability for Wall Street … here’s hoping that, as Obama writes new agreements with the Big 2.5, he also clamps down on Wall Street’s transgressions.

      Some people who know much more than me about this are saying that his new rules WRT Wall Street are waaaay tougher than BushCo … no surprise there !

    • emptywheel says:

      Canada came forward with bailout money before the US did late last year. The big problem is that the UAW is much farther away from concessions in Canada than in the US.

  14. JohnLopresti says:

    I agree about the hollowness of the shell of meaning of the pizzaz in Fiat design, I simply saw them as an enthusiastic scavenger in the low end of the food chain, a VW, if you will, that never wanted to make good, just wanted affordable small cars with raucous motors and IT design flair even if the substance behind that form was evanescent if existing at all. Though, I called the Fiat fit early in this. The difficult part will be selecting a right-to-work state for siting, if, indeed, they opt for onshore fabrication. However, disclosure, I have consigned the sicklebar cutter by Fiat to the barn, though still employing a New Holland mower on the Toyota tractor. The implement expensive gear and perhaps undersized but some parts of it are well designed. It would look funny, though, and be too dangerous, to commute on a Toyota tractor, except on the terrain where it is matched to the challenge. I think the cost of wages and fringes are going to continue to be the substantive barriers to prolongation of the assemblyline enclaves in the US’ rust belt, and the unions which gathered early raison d’etre there will sustain predictable setbacks in that regard. Morph. Footnote: Obama names Elizabeth Garrett Assistant Secretary for Tax Policy; several others described at link.

  15. FrankProbst says:

    When is Obama going to restructure Citi and AIG this radically?

    I admittedly don’t understand what sacking Wagoner does to help (or hurt) GM, but I have to say that I think it’s a really good move in the long run. Because now, it should be obvious to Wall Street CEOs that they risk losing their jobs if they can’t get their shit together, and now Obama has political cover to do just that. Next time they come asking for money, Obama can say, “Look, I really really don’t want you guys to have to take responsibility for your actions. Honest. But Wagoner had to step down, so there’s just no way I can keep setting money on fire for you guys unless someone falls on their sword.”

    • Praedor says:

      I just had the thought that what Obama MIGHT be doing in sacking Wagoner is sending a signal to the bankers that if they don’t play well in the PPIP (criminal) taxpayer screwjob, then the next heads on the chopping block are theirs.

      I’d prefer they get chopped BEFORE there is any shenanigans with gaming the PPIP. Nail the bastards FIRST, and then let the bullshit PPIP go through.

  16. Petrocelli says:

    Canada to provide additional $4 Billion to GM & Chrysler

    “The federal and Ontario governments say they have not received realistic restructuring plans from General Motors Canada and Chrysler Canada, but will go ahead with up to $4 billion in interim loans to keep the companies afloat temporarily.” – CBC

    This is in addition to previous bailouts handed out by both levels of Gov’t.

  17. Synoia says:

    Obama needs to break up the naked CDS racket. Call it gambling, illegal gambling, and prosecute the parties under RICO.

  18. Leen says:

    During the bank bailout hearings and the auto industry bailouts the distance between the language used and demands made were measurable.

    Bank bailout “rescue, investment, recovery” plan
    Auto bailout “restructure, restructure, restructure”

    Too bad Obama applies different standards to these two industries…but when Wall street controls the Treasury(purse strings) what are you going to do?

  19. eCAHNomics says:

    Sent Obama the following email:

    Way to go, O.

    Yep, blue collar workers and manufacturing has to sacrifice, but not your precious financial industry, which financed your campaign. Little obvious who’s bought & paid for you, isn’t it?

    • MrChip says:

      I agree, all the posts I read everywhere ‘hoping’ he will do something about Wall Street. I’m so very tired of hoping…If I just saw a glimmer of the rage we feel from him or if he’d just start putting Americans ahead of say banks (which really aren’t people despite what the courts say) maybe I’d have some of that hope stuff too but I’m realist with no loyalty to party (only country) and I can tell already, he’s going to help ensure my country’s fall off the top of the heap…

  20. Praedor says:

    “Legacy costs” means retiree pensions. By “dealing” with these costs, what Obama means is “Fuck over the retired working folks for the sake of the rich.”

  21. Blub says:

    I’m generally supportive of the president’s moves in respect of Chrysler – Chrysler has been raped by its bankster execs for years and years and years, combined with its divorce from the Germans, has left it a non-viable company (albeit, ironically, a financially and structurally non-viable company with fairly OK products). Short of nationalization or forced sale to a foreign company, I can’t see a way out of the company’s problems. I’m hoping that some type of partial (and at least temporary) nationalization, leading to retooling and subsequent sale of production assets, remains an alternative in the worst case scenario.

    I’m a bit confused by the GM 60 day thing (although I absolutely support firing Wagoner and the do-nothing board of entitled thugs), because a consent solicitation or cram-down of existing bondholders takes some time to put together and will alsmot certainly crater the company if it’s estabilshed as a pre-conditioned (have they at least hired an i-bank to structure the cram down and begin the consent solicitation or did they simply take no action at all????). I hope they’re saying that nationalization is an alternative to outright failure or there’s some other card up the administration’s collective sleeves.

    Now, when is Pandit at Citi gettin’ fired?

  22. eCAHNomics says:

    This is another incoherent plan from Obama. Force a cyclical, but functioning, industry into bankruptcy in the depths of a downturn, while holding a nonfunctional industry (finance) together with magic. Oh, and trillions of taxpayers money.

    • barbara says:

      And isn’t it London where some 35,000 protestors showed up for an anti-G20 rally? The only way Americans show up any more is in their SUVs where they can watch television while they occasionally remember to shout their protest out the vehicle window. We are no longer a people willing to stand up and fight for our rights. Wall Street and Pennsylvania Avenue are counting on that. Laissez faire in America means let the bloodsuckers suck blood in peace.

  23. Bluetoe2 says:

    It’s obvious that the U.S. is nothing more than a plutocracy dominated by the banksters. Their man Obi has given them everything they’ve asked for with few strings attached. If this were to happen in any number of European countries there would be millions of people in the streets if not an outright revolution. Americans have become accustomed to merely fighting over the scraps that fall from the banquet table of the plutocrats.

    • bmaz says:

      He has been working for a dollar, and had agreed to keep doing so into the future. You think because Obama got a hair up his ass and decided he needed a superficial sacrificial head on a stick because he didn’t have the common sense or balls to get one from Wall Street, that Wagoner should walk away with nothing? All just to satiate Obama’s little petty power trip

  24. Cujo359 says:

    My take on this was a little different, EW, but that’s partly due to the stark contrast between this and the treatment of the banking industry. If they were in some way comparable, I might be more impressed with these plans. In the meantime, though, it just looks what we’ll end up with is a smaller auto industry and banks that are even more useless than the ones we have now. That Montgomery has manufacturing experience is a good thing – the Big Three all have problems in that area. Unfortunately, if it’s not automotive manufacturing experience, it’s going to take some time for him to get up to speed. Time is something the automakers no longer have in abundance.

  25. PPDCUS says:

    Equities, Iniquities & Inequalities

    It’s not clear to me how the auto industry with its diverse interests will be helped by sacking Wagoner and enforcing union contract concessions. But all of this stands in stark contrast with the administration’s most favored extortionist treatment of Wall Street.

    Taxpayers, ccnsumers, workers & small business owners are pitted against capital, finance, mega corporations & government. It’s a battle where there will be few winners and many losers. No room for relational synergy.

    Fundamental policy change is needed now, or we’ll look back on the past weekend three years from now and say — this was the end of President Obama’s audacity of hope for a second term.

    No amount of lofty rhetoric or projected confidence can obscure the fact that our system of rewards, sanctions, moral risk & arbitrary distribution of wealth is profoundly broken. With the financial system in free fall absent massive government bailouts, there’s much more at stake than just an election.

    The closest historical parallel that comes to mind is France 1787.

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