U.S. Government forces head of GM to resign

[ziggy29]

If the government's going to start telling business how to run, then how about this one?

IBM files for patent on offshoring jobs - recordonline.com - The Times Herald Record

As IBM was firing thousands of American workers last week, the U.S. Patent and Trademark Office published Big Blue's application to copyright a computerized system that calculates how to offshore jobs while maximizing government tax breaks.


Update: IBM withdraws its application, calling it an error.

They said the application was in "error" and they withdrew it. Was it an error, or did they have to perform damage control after something they didn't want the public to know got leaked out?

 

[haha]

They said the application was in "error" and they withdrew it. Was it an error, or did they have to perform damage control after something they didn't want the public to know got leaked out?

How could it be an error? The monkies were all typing away at their keyboards and lo and behold out came a patent application, and then one of those darn monkies submitted it?

Ha

 

[ziggy29]

How could it be an error? The monkies were all typing away at their keyboards and lo and behold out came a patent application, and then one of those darn monkies submitted it?

Yeah, I know -- I was being facetious. Bottom line, I think, is that they were hoping to do this quietly and had to perform damage control when the press got it.

 

[Independent]

I live in Iowa, so I think of the "early days" of the campaign as being here and NH. My recollection is that union members were more for Edwards than either Clinton or Obama. Here's one story: Obama-labor relationship tense in Iowa - Ben Smith - Politico.com
I'll agree that in the next election, he's going to want the whole Dem coalition.

Why fire Waggoner now? My guess is that
(1) he said "bankruptcy is not an option" too many times,
(2) he couldn't negotiate a deal between the union and the bondholders that had them both giving up enough to make the company work, and
(3) he was a symbol of entrenched management that "doesn't get it", that Obama couldn't risk after the AIG bonus fiasco.

If I'm Obama, I'm thinking that it's time to start talking about how much the bondholders are going to give up. I noticed that they got mentioned for the first time yesterday.

 

[ziggy29]

If I'm Obama, I'm thinking that it's time to start talking about how much the bondholders are going to give up. I noticed that they got mentioned for the first time yesterday.

I'm sensing that the bondholders want the union to give, and the union wants the bondholders to give, and that if I'm Obama, I try to get them locked into a room to work out a "GM viability" deal requiring both of them to share sacrifice to avoid a bankruptcy which (except for a few speculative bondholders) almost none of them want.

On one hand, I suspect Obama doesn't want to cross the unions because they were such a strong show of support for him in the election, but on the other hand this could be an "only Nixon could go to China" moment.

 

[Gone4Good]

I'm willing to wait & see how the GM / Chrysler thing works out before casting stones. Folks here might remember that it was the Republican President and Treasury that essentially bailed out GM & Chrysler. Now we have to live with that decision . . . Comrades.

For what it's worth, most of what is being said by the administration is constructive. They're essentially working through a restructuring of the auto's liabilities either in bankruptcy or out. The Union's feet is being held to the fire by bondholders, who ultimately have veto power over whether a deal gets cut or we go to bankruptcy court. Ultimately I think this ends up as a pre-packaged bankruptcy just to use the court's power to compel compliance.

Certainly there is the risk of ongoing political meddling in the Auto industry, which would be bad. But if they can pull off a pre-pack this year that would likely be a stunningly positive development versus a messy and disruptive chapter 11 (7?) that would drag on for several years.

Lets just hope the subsidies end when the "restructuring" is done.

 

[samclem]

Lets just hope the subsidies end when the "restructuring" is done.

Unlikely, in my opinion. The subsidies and taxpayer-funded "incentives" will be baked into the mix. There's no way the government is just going to stand back and let the players/courts do their thing. Nope, those legislators and Exec Branch automotive experts will be in there up to their elbows. For example, how likely is it than the bankruptcy will result in more GM production being moved overseas (where it is actually profitable) if the government is involved? What carrots/sticks will be provided to assure a "proper" outcome? ("Sure, have your employees vote. But decertification of the unions will make it very hard to get any more aid to you guys. Also, the new GM must still pay prevailing union wage wherever it operates if any GM branches/subsidiaries want to do business with the government").

 

[unclemick]

I'll probably get flamed for this one...but the devil's advocate in me came out.
The headline could just as easily be written...
"GM CEO performance forces US Govt to use taxpayers' money to prevent massive unemployment of American w*rkers"
Go ahead and throw the rotten tomatoes.
I actually wish the GM Board of Directors had performed this action. But since they didn't, somebody had to be the bad guy.

Not only that - when we get those SOB's into bankruptcy - then the court takes the heat when debt gets written down, pension and health benefits get savaged and other yucky things take place.

Us shareholders(if only via mutual funds) and we voters can fein innocence.

And if yer a dang foreigner who owns American mutual funds/stock - you're guilty also.

Ok - have I left anybody out?



heh heh heh - so do I keep my Chevy cause it will a valuable antique someday - or what? Soap by any other name is still fun.

 

[ziggy29]

Sounds like GM and Ford are following Hyundai's lead in offering "layoff protection" for people who buy a car in the next few weeks, offering to make payments for a few months for those terminated without cause.

Time will tell whether this is a marketing boondoggle or a stroke of genius.

 

[Gone4Good]

Unlikely, in my opinion.

Mine too.

But I'm at least willing to wait to see it happen before I criticize it.

In the meantime it appears to me that the Administration is being tougher and more thoughtful in its approach with GM & Chrysler than anyone had any reason to believe possible. It looks likely that GM will end up in bankruptcy and Chrysler will either get merged with a foreign manufacturer or end up in bankruptcy too. Who would have put money on those outcomes on November 4?

 

[HFWR]

Such melodrama...

This morn on Squawk, both Wilbur Ross and Mike Jackson, two gents who probably know a bit more about the auto bidness than most or all of us, seemed to be supportive of firing Wagoner, and thought his replacement was a good choice. Granted, both gents have skin in the game, but it's refreshing to see folks like Buffett, Ross, Welch, etc. talk in a business-like fashion about how these issues should be addressed, rather than throwing an idealogical tantrum...

 

[TromboneAl]

Wagoner has said the biggest mistake he ever made as chief executive was killing the EV1, GM's revolutionary electric car...

I wonder if things would be any different now had they hadn't done that.

 

[Zathras]

In my mind that was a sypmtom of a bigger problem. That being the attitude towards short term gain over long term health of the company.
If the only thing change was that they continued to develope the EV1, without changing the more fundamental issues, no, I don't think it would have changed anything (except I would be a proud owner of an EV3 ).

 

[Gone4Good]

Such melodrama...

This morn on Squawk, both Wilbur Ross and Mike Jackson, two gents who probably know a bit more about the auto bidness than most or all of us, seemed to be supportive of firing Wagoner, and thought his replacement was a good choice. Granted, both gents have skin in the game, but it's refreshing to see folks like Buffett, Ross, Welch, etc. talk in a business-like fashion about how these issues should be addressed, rather than throwing an idealogical tantrum...

Yup. When Wagoner took over GM's stock traded at $70. His company continued to lose money even when global automobile sales hit record levels. The fact he wasn't shown the door earlier is a testament to our broken corporate governance.

Besides, the stories coming out overnight said that Wagoner was pushed out because he was resisting bankruptcy at all costs. Today the Administration said the 60 day "grace period" was firm because they weren't going to use taxpayer dollars to repay a June bond maturity.

You'd think the folks who've been advocating a GM bankruptcy all along would be cheering these developments. Instead they are crying foul. I guess it just shows that they'd rather twist their principals than support anything this Administration is doing. Sad really.

 

[samclem]

You'd think the folks who've been advocating a GM bankruptcy all along would be cheering these developments. Instead they are crying foul. I guess it just shows that they'd rather twist their principals than support anything this Administration is doing. Sad really.

If I may be so bold as to speak for the anonymous bunch at which you are casting aspersions: I don't think many are gleeful about a GM bankruptcy. But, given the state of the company and the mess that has been created by all parties (government, the union, government, GM management, and the government), bankruptcy is likely the only way out. As you yourself pointed out, it was President Bush (and Congress) who started this bailout, so I don't know why those critical of the bailout would necessarily be seen as criticizing our present President (at least on this account). I'm hoping the President's admirer's will maintain their objectivity and not see every criticism of policy as a criticism of their guy. It would have been better to be at this stage (the threshold of the bankruptcy process) several months ago. The sooner this is over, the sooner the company and its employees can move on. Uncertainty is bad for business and investment. Bankruptcy brings certainty, the never ending saga of government handouts/reprieves/challenges/public castigations/political posturing does not. The violation of "principal" that is troubling centers on who approached Wagoner for his resignation (should have been the folks he works for, not a government functionary) and the likely reason this was done--to pave the way for a giveway to certain entities now in political favor. That's the part that is "very sad."

 

[Gone4Good]

so I don't know why those critical of the bailout would necessarily be seen as criticizing our present President (at least on this account).

But one would think that those critical of the bailout would be supportive of recent developments that seem to suggest that bankruptcy is now the most likely outcome. Yet we've heard scant recognition of that from those who claimed to see bankruptcy as the right solution. From this contradiction I can only conclude that some here are genetically incapable from using the words "Obama" and "right" in the same sentence.

For the record, I favored letting the auto's go bankrupt http://www.early-retirement.org/forums/showpost.php?p=759195&postcount=57. I thought that when Bush bailed them out. I think that now that Obama seems to be heading in that direction (more so now that the banks have been stabilized).

So if they file under Obama's watch, can I expect to see samclem start a new thread titled "Obama was Right and Bush was Wong"?

 

[samclem]

So if they file under Obama's watch, can I expect to see samclem start a new thread titled "Obama was Right and Bush was Wong"?

No, my thread will be entitled "Once Proud American Industrial Giant Forced into Bankruptcy Less Than One Year into Obama's Reign.
Subheadline: New CEO Pelosi Hails Great Day for the One Remaining US GM Worker, Claims Additional Bailout Money and Protection From Foreign Competition Needed "

Was Obama "wrong", too for wanting Bush to bail out the auto makers?

Is "right" and "wrong" and keeping score what this is about? There are a lot of folks with very thin skin when it comes to criticism of the policy of the executive branch.

By the way, I want very much for President Obama's term in office to be successful. In fact, I want him to be the best President we ever had. I think this is most likely to occur if he changes most of the policy prescriptions on which his campaign was based. Fortunately, he's demonstrated a certain "pragmatic flexibility" that may stand him in good stead, especially if his present policies cause a disturbance among the electorate.

 

[ERD50]

Wagoner has said the biggest mistake he ever made as chief executive was killing the EV1, GM's revolutionary electric car...

I wonder if things would be any different now had they hadn't done that.

If I'm reading that right, the mistake was the PR disaster that he created, not an economic or design or marketing mistake.

I fail to see how it would have helped them to try to sell electric cars outside of the CARB mandate. And if it would have, why didn't any other innovative company like Honda, Toyota, or Daimler jump into this market if it was so great?

Seems like all it would have done is sunk them faster. And unless gas goes above $4, or batteries get much cheaper in the next few years, I don't think the Volt will do much for them either.

-ERD50

 

[youbet]

Is "right" and "wrong" and keeping score what this is about?

Not sure if you meant that as a rhetorical question or not..... But, obviously, yes that is what this is about.

 

[samclem]

An update in the ongoing saga!

From the WSJ:

Steven Rattner, the leader of the Obama administration's auto task force, was one of the investment-firm executives involved with payments now under scrutiny in a state and federal investigation into an alleged kickback scheme at New York state's pension fund, according to a person familiar with the matter.
A "senior executive" of Mr. Rattner's firm, Quadrangle Group, met with a politically connected consultant about a finder's fee, then the firm agreed to pay what became a $1.1 million fee after receiving an investment from the state pension fund, according to a Securities and Exchange Commission complaint against two former New York political officials and others.
The person identified in the complaint as a "senior executive" is Mr. Rattner, who co-founded Quadrangle, according to the person familiar with the matter

Don't you just know that former GM CEO Rick Wagoner is all broken up about this. He's probably already sent poor Mr Rattner some flowers.

 

[USK Coastie]

Rattner is working for less than $500k/yr right? That is the new max compensation allowed by BHO for any CEO who's firm has received a federal bailout.

 

[freebird5825]

Oh, this is gonna be a real paper-seller...go get 'em, Mr. Cuomo
ATTORNEY GENERAL CUOMO ANNOUNCES SWEEPING INDICTMENT IN PAY-TO-PLAY KICKBACK SCHEME AT THE NEW YORK STATE COMPTROLLER’S OFFICE

He's been a very busy boy lately
http://www.oag.state.ny.us/media_center/media_center.html
A lot of the Wall St mess will be prosecuted via coordination between the offices of the NY AG and SEC NY Regional Office.

SEC press releases can be found here.
http://www.sec.gov/news/press.shtml
Just for fun, look at the headlines across years. Interesting contrast...

Stay tuned...

 

[samclem]

And in a related note: According to a letter from Chrysler CEO Nardelli, if FIAT goes through with the deal with Chrysler, then a new Chrysler CEO and board of directors will be appointed. Fiat will appoint some of them and the US Government will appoint some of them.

That's a hoot. It used to be that Italian companies were the ones with CEOs and boards appointed by the government. Now the US government is following the Italian model. That's a formula for success--not.

 

[Zathras]

Well, to be fair, the rubber stamp boards that many companies have, have led to rather disasterous results.
Now, I don't know that the quality of the board will be any better, but the current ones haven't done well.

 

[HFWR]

An update in the ongoing saga!

From the WSJ:

Don't you just know that former GM CEO Rick Wagoner is all broken up about this. He's probably already sent poor Mr Rattner some flowers.

Is anyone surprised that a powerful executive, politician, etc. has skeletons in his/her closet?

Well, to be fair, the rubber stamp boards that many companies have, have led to rather disasterous results.
Now, I don't know that the quality of the board will be any better, but the current ones haven't done well.

My thoughts as well, which shouldn't be construed as being supportive of gummint intervention...