Last night, the CEO of General Motors, Rick Wagoner, was fired by the President of the United States. Perhaps not “fired” in the strict legal sense – if legalities matter anymore – but certainly fired for all effective purposes. In a statement by Wagoner released last night, the now-former CEO states specifically that Administration officials “requested that I “step aside”’ as CEO of GM.” “And so I have,” he said. No pretense of an agonized decision, no pretending that the board asked him to go, simply that the White House asked him to go and he left.
It’s hard to feel sorry for Mr. Wagoner. Not only did he lead GM into economic ruin, but he led the charge to Washington, D.C. for handouts, costing taxpayers billions, and – perhaps worse – inviting political control over the former industrial giant. The real concern is not that Wagoner was fired, but that he was fired by the White House and not a bankruptcy judge.
And despite President Obama’s statement today that “the federal government has no interest in running GM” that is exactly what it is doing, with every strategic decision being reviewed from Washington. Chrysler is equally under Washington’s thumb – being instructed this week to finalize a pending strategic alliance with Fiat.
The question isn’t whether Washington will run the auto companies, but for how long. And on this front, there is potentially some good news: bankruptcy – which would provide a politician-free process for enabling (and forcing) GM and Chrysler to restructure, is being actively considered by the Administration, with the president himself today implying that the two firms may need to use “our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.”
He’s right – and is right to put bankruptcy squarely on the table. But, at the same time, he promised GM an additional 60 days in taxpayer funding, extending once again the “deadline” for action. This cast doubt on whether the Administration has the political will – now, in 60 days, or ever – to press the bankruptcy button.
No matter how many CEOs are fired; bankruptcy is the real question facing President Obama. The future of a privately-run automobile industry may depend on the answer.