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UPDATED: Obama asserts control over the auto industry
WASHINGTON (AP) — President Barack Obama asserted unprecedented government control over the auto industry Monday, bluntly rejecting turnaround plans by General Motors Corp. and Chrysler LLC, demanding fresh concessions for long-term federal aid and raising the possibility of quick bankruptcy for either ailing auto giant.
Obama took the extraordinary step of announcing the government will back new car warranties issued by both GM and Chrysler, an attempt to reassure consumers their U.S.-made purchases will be protected even if the companies don't survive.
"I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars," Obama said in his first extended remarks on the industry since taking office nearly 10 weeks ago. And yet, he added, "our auto industry is not moving in the right direction fast enough to succeed."
Obama, flanked by several administration officials at the White House, announced a short-term infusion of cash for the firms, and said it could be the last for one or both.
Chrysler, judged by the administration as too small to survive, got 30 days' worth of funds to complete a partnership with Fiat SpA, the Italian manufacturer, or some other automaker.
GM got assurances of 60 days' worth of federal financing to try and revise its turnaround plan under new management with heavy government participation. That would involve concessions from its union workers and bondholders. The administration engineered the ouster of longtime CEO Rick Wagoner over the weekend, an indication of its deep involvement in an industry that once stood as a symbol of American capitalism.
Obama's announcement underscored the extent to which automakers have been added to the list of large corporations now operating under a level of government control that seemed unthinkable less than a year ago. Since last fall, the Bush and Obama administrations, often acting in concert with the Federal Reserve, have engineered the takeover of housing titans Fannie Mae and Freddie Mac, seized a large stake in several banks and installed a new CEO at bailed-out insurance giant American International Group.
The latest addition to the list, the once-proud auto industry, has struggled with foreign competition for more than a generation, then was further battered by the recession and credit crisis gripping the economy. Obama said 400,000 industry jobs have been lost in the past year alone, many in Michigan.
Under Fritz Henderson, newly named as CEO, General Motors issued a statement saying it hopes to avoid bankruptcy, but will "take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."
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Comments
The banks were simply handed 780 BILLION dollars, yet the auto industry can't get 13 billion? What's the difference -- except the color of the collar worn by majority of the workers in the two industries.
Keep in mind that the collars you are referring to from the auto industry voted for the Black Messiah. Of course the UAW knew that the repubs would not kiss their butts.
That being said, I and anyone else with a brain knew from the start that GM, Chrysler and possibly Ford would not make it without bankruptcy.
I am so proud of Mr. Wagoner stepping aside for the good of the company. I sure hope that GM at least gave him a weeks' salary for each year he was there!!
I think Rick jumped on the grenade purposely with the consent of the government to get the bondholders a message that they have to come to the table (the unions too, but the UAW has been more proactive than the bondholders). This is why Fritz Henderson was chosen interim CEO..he is cut from the same cloth, and knows the company.
Rick will eventually go down as one of GM's better CEOs, despite the fact he didnt do enough to shed brands in the US.
Barack Obama seems as he is trying to close auto companies which helped America become the nation she is. B.O. seems to want the foreign auto makers instead. B.O. is not for American Citizens and we hope that every American Citizen would have a stand up applause for Rick Wagner as he worked diligently for GM, the employees, retirees and even those whom worked for the supply companies, trucking industry and other companies. Posted by Allan
Controlled bankruptcy is the wrong move and it shouldn't happen. The possibility was recognized now as simple leverage in preparation for union concession. Adding the piece about backing warranties is interesting but at this point I think popular opinion would dictate that it is not a wise move; people (myself included) don't want to hear about taxpayers incurring additional expenses after billions have already been invested.
I believe most people are missing what this firing of Rick Wagoner really means. If the adminstration( Obama) has the power to fire someone from the private sector, it will have the power to make the new CEO do what it wants or the same fate awaits. This could lead to the CEO being told what kind of cars can be made and what CAFE standards must be met, a dream of the left for decades. This will trickle down to suppliers and everyone associated with GM. The government will now control one of the largest companies to ever exist and can use this power and it's control of the media to make life miserable for the other car companies, much like the've been trying to do to Wal Mart for years. The nationalization of the banks could be a reality and then the government can dictate who can get loans and who will pay what rates. Want a loan for a big gas guzzler from Ford? Well then you'll pay this rate. If you buy this small car from GM, then you can pay this nice low rate. People, you can root for any party you want, and you will stick with your man to the very end, so that you don't have to say you were wrong, but you may want to open your eyes and realize the other side might just be correct. This is one heck of a very slippery slope we're about to go down,make sure you can look at this without being blinded by ideology. You can call me an alarmist, but I'd rather be alarmed than asleep.
"Let me be clear: the United States government has no interest or intention of running GM,"
Yet "the administration forced the departure of Rick Wagoner as CEO of General Motors"
So which is it Mr. Obama? are you going to pick and choose who heads the company instead of electing them?
I thought we VOTED for a PRESIDENT, yet it looks more like we APPOINTED a DICTATOR.
O-one
B-big
A-a$$
M-mistake
A-america
I think you guys are reading too much into this. The bondholders havent bunged one penny in their negotiations b/c they are sitting back waiting for more govt bailout money (Dick Fuld, head of Lehman, did the same exact thing - he wouldnt listen to Paulson who was telling him to find a buyer, b/c he thought the govt wont let Lehman fail). I think Obama and Wagoner agreed on Rick stepping down. Thats why GM's no 2 was put in place. It was a shot across the bow to the bondholders to be ready to feel some pain.
I have heard that most of the people that were supposed to get bonus money from AIG were in fact people that were hired to try to fix AIG's problems after the original a-holes took off with their big severence packages. Don't know if it is true or not but this idea of a special tax of those bonuses at 90% goes along with the mentality that borylie and scrooge have described.
Government contracts can be nullified at any time but the A-hole in the treasury was talking about being able to shutdown private enterprise if the government did not like them. Scary ideas.
Socialism may sound good to some people but just remember that the only people that will be equal will be the sheeple! The rulers will still rule!
The only hope is that some of the moderate democrats will wake up to what is happening.
Obama never went to any company and offered tax payer money for any control in any company. The CEO's that ran these companies into the ground came to him with their hat in their hand.
If the taxpayer is going to save these companies don't you think they should take a close look at how the company got in the situation the are in? If after checking out the company you feel that the company should be saved but needs new management, what is the problem? Should you just give the money to the same people that ran it into the ditch and hope that they are now somehow more competent? Instead of just giving the money with no strings or payback required (Bush) we the tax payer will hold stock. That stock could be sold at a later date, hopefully at a profit.
I wounder if the real problem some people have is the saving of a company that has employees that are union.
Make sure you keep beating the BLAME IT ON BUSH drum. This was a democratic controlled and approved decision even while Bush was president. They could have easily said NO if the democrats didn't want to give bailout money while Bush was president. They had the power and control to do it just as they do now. If they are going bankrupt which is apparently what OBAMA wants, then they shouldn't have been given any money at all. People complained about all the money being given to companies and called it throwing good money after bad. Let the companies go bankrupt. The remaining companies will pick up the slack.
most of you guys are way off on this one, pci510 especially. if Obama wanted the U.S. automakers to fail, he would have let them go under and disappear. is that what you want?
I will speak bluntly here, I thought he should have just let them go under. After all, their terrible choices in what cars to build (making us even more dependent on foreign oil) led them to where they are today, with their hands out looking for money from us.
On the other hand, many of the people in the mahoning valley would be out of work if GM went under.
It is a complex situation and I'm glad I'm not in charge, but to make blanket statements like "Barack Obama seems as he is trying to close auto companies which helped America become the nation she is. B.O. seems to want the foreign auto makers instead. B.O. is not for American Citizens" - is foolish.
You scold the man who is trying to help GM stay afloat and praise the idiot (Wagoner) who led them into such a terrible crisis. What the heck is wrong with you guys?
Cambridge, darn I'd hoped you were one of the purged. HaHa. First of all regardless of who came to the government with hat in hand, it's quite dangerous for the President to have a hand in firing a person in the private sector. There are ways to make the business accountable, but this is not the way. Let's assume you have a job(haha), or better yet a business in Youngstown, and Mayor Williams decides that your not running your company the way he would like it to be run and the city had given you a tax abatement. So he fires you and tells the new manager how it should be run. May not be apples to apples, but you get the drift. Don't you?
Secondly, your psychoanalysis of the posters here that they have a problem with saving companies that have union employees. My wife's pension and our health benefits come from Delphi/GM and we feel the same about the financial bailouts as we do the auto bailout. Let them fail. The strong survive, someone will pickup the pieces, this is the way the market works, corrections are needed, etc. Even though we'd be hurt by GM going under, we stand on principal and what's good for the country as a whole. As a union member we know the good and the bad of being a union member. The good is that it benefits only the union member, not the good of the country. The bad is it benefits only the union member.
Third and last, get over hating President Bush and look at the big picture( no not the one in your coloring book). Just keep asking yourself what if? What if the government takes over our lives? (socialism). What if President Obama is the front man for the far,far left and is pushing their agenda?What if the media didn't do their job and there is alot we didn't learn about Obama? You better stay alert in the next few months and get over your ideology. Unless you want the government running your life. Find out what a liberal/democrat stands for, I bet you'll be alarmed.
Yeah, yeah, yeah, it's OBAMA's fault that GM lost billions in the last few years and that the cost structure is B.O.'s fault too. Probably Baracks fault Katrina was a strong hurricane.
The entire economy was built on debt that was leveraged and now the bills need paid.
GM needs major changes and the ONLY way those changes are going to be made is if someone like the government puts strings on the money they need or force them into a streamlined bankruptcy.
You right wingers need a dose of intellect. Blaming Obama is stupid and shows how little you really know about economics.
Comparing the banking system which is the backbone of the entire capitalistic system to a small manufacturing segment is also idiotic. GM, Ford, and Chrysler need to drastically change their business models or parish. For Chrysler it's probably too late already. Ford seems to be the only one on the right path. Local Lordstown unionites seem to think the government (taxpayers) should subsidize their overblown wages and benefits. The golden trough for jobs that require no skills is over. Next up, the public sector.
Apollo, you left wingers with all your intellect, should read Little Red Hen. Seriously, read it. It's your ilk that is so caught up in ideology, that keeps the common folk from coming together and keeping our elected officials working for us. Demand from your newspapers that you get the truth. You try to come across as educated and all knowing, while your ideology pulls you down to the level of the ignorant and uninformed. You like calling the posters stupid and idiotic while you lost sight of the original intent of the article and the posters. It's about the power the President is obtaining. Wise up.
borylie:
The minute a company comes begging and is saved by the tax payer it is no longer private. The sooner we get our money back and the company IS private the better. That is exactly what Obama wants.
Cambridge,
Put down the shovel. The "stupid" hole is deep enough.
borylie:
I can tell by your posts that your a Glenn Beck fan. You seem to be afraid of "Obama's Power" and preach the same doom and gloom.
Did you have the same fear of Presidential power when we invaded a country that did nothing to us, gave out no bid contracts to the Vice Presidents cash cow, watch New Orleans be destroyed while the administration sat clueless? I could go on and on or I could respond like yourself and call people that don't agree with me names.
You should just stick to the subject and refrain from drawing conclusions about other posters. I ignored your previous comment about whether or not I even need a job or where I live. I could probably pay you to leave town. When you attack someone personally it just shows your lack of knowledge of the facts. If you stop watching Fix News you might stop being afraid of some meaningful change.
You guys simply don't get it. When we saved the banks we subsidized the excesses that brought us to the brink in the 1st place! Start researching what really happened and it will make your heads spin!
Many of you want to throw the auto companies and their employees to the wolves,. Seriously, have any of you BEEN PAYING ATTENTION??? These people PRODUCE things. It's not a piece of paper, a fictional figure of worth, it is a PRODUCT! These people PAID TAXES, which in turn provided communities with the money needed for governmental and safety services. Look at what is happening after the downturn of the auto-industry ( layoffs, wage and benefit cuts for those who remain ) .... the EROSION of those services and communities ability to pay for those services.
Prop up the banks ... who gains?? THE BANKS AND PEOPLE WITH MONEY THAT OTHERWISE WOULD HAVE LOST THAT MONEY THROUGH RIDICULOUSLY STUPID AND RISKY INVESTMENTS AND DERIVATIVE PLAYS! THEY GET BONUSES AND WE GET TO FOOT THE BILL!!!
Produce goods, put people to work, pay them a DECENT wage WHICH IN TURN BUILDS A MODERATE TAX BASE .... who gains??? EVERYBODY!!!
Your animosity is misguided! The PIGS at the TROUGH have been these corporate CEO's, their BANKING and INVESTMENT BUDDIES, and their SUBSERVIENT POLITICIANS whether they be DEMOCRAT or REPUBLICAN!!!!
avoiceofreason95:
Your username says it all. Bravo!
Cambridge,
I recall a few weeks ago you called me a name. Now you're against name calling? Your parents should demand their tax dollars back for your lack of education. Like I said earlier, put down the shovel. You're just digging yourself in deeper with your inane comments. Try looking out your windshield instead of your rear view mirror.
cambridge and apollo are prime examples of uninformed left-wingers who only get their dose of political education from the drive-by media.
seriously cambridge - are you actually of the belief that Bush gave Haliburton the fat contract just to make Cheney richer? OMG get the facts - afterall it is history now. Halliburton was one of only two companies in the WORLD that had the technology and knowhow to get the job done - the other was French if i recall. Had he given it to the other company you would be b!tchin about him not using american companies.
Oh, and the country that did nothing to us? Is that the same country that ignored 137 UN resolutions? Or the same one that harbored and trained terrorists that declared a holy war on the US?
The same country that many other nations joined the US to invade?
Give me a friggin break!
I don't have a fear of presidential power - as defined in the constitution - but I do have a problem with a president who abuses his power to the point of demanding private sector companies be controlled by his puppet strings.
The government giving money to a private company is still a private company. let me explain this so even you can understand.................. If the government gives you food stamps, do they also dictate how your food is prepared or what food you can feed to your family?
Now use that same example and insert GM or Chrysler and replace food stamps with bailout cash - see the difference? No? that's because there IS NO DIFFERENCE. You, as CEO (parent) and food stamp recipient are still a private individual with the ability to do as you see fit with the food that was "given" to you even if it makes you fat or unhealthy, GM should be allowed to choose the cars people WANT to buy and be run by the CEO of the people's choosing.
If Obama stepped in and told you you could ONLY eat healthy foods prepared a certain way we would hear the complaints all the way to Washington.
Last I checked GM still has most of the most number of fuel efficient vehicles offered in the world. Obama wants to change that by limiting the makes/models offered. If he gets his way it will be very similar to Henry Ford's options available on the model t "any color you want as long as its black" (no pun intended)
The auto companies involved the government in their business. The government did not show up out of nowhere and take over these companies. Your a tax payer. Do you want to just give them money and have no stake or say in the company or let them go out of business and put millions of tax payers out of work.
GM is part of Americana. It's been important part of our economy for generations. You don't see any value in saving it?
Like I said. When the auto companies came begging and accepted the tax payers dollars they ceased to be a private company. But I'm sure your from that belief of no rules, no regulations or government oversight. Just take care of the ultra rich and they will take care of the rest of us.
As far as you defending the Bush administrations spending 35 million dollars a day for the last six years in Iraq, that's laughable!
borylie:
I checked a lot of my previous posts. I can't find anywhere that I got personal and called you any names, or anyone else for that matter. If you however find yourself lost for words knock yourself out.
Cambridge,
Feb.16,2009@4:35PM you used BORnLIE to address me.
Feb.16,2009@12:39PM you used boryLIE to address me.
These posts are not about you & I, see ya.
Looks like a typo to me. I hit an n instead of y.
GM is just one of Hussein's power grabs. He is taxing us out of existence while giving trillions of money away that we will never know where it went. Ciggy taxes out the ying yang to pay for all the illegal anchor babies. Now he is going to have the Fed regulating the ciggy industry. Have any of you read HR45 Blair Holt Firearm License & Record of Sales? Another left winger stepping on our second amendment. If Hussein is successful in also changing our Supreme Court, just say goodbye to any and all freedoms you thing you ever had. BTW, our votes will not count as anything as Hussein is arranging that by taking over the census. I think every American needs to wake up and be frightened of this power grab. I only pray they find out he is not a natural born citizen. If they finally do, all of his power grabbing will be null and void. I say my prayers each day.
~most certainly ~~ Rocco~~
Maybe you heard this like I have a year ago~~ & I shrugged it off ~~ thinking how can the gov possibly succeed~~
Here's what I heard;
~~ A year ago~~ a dear friend of mine was actually freaking out ~~
She said that she heard that our Government was going to take ALL our money, homes, etc. & we will have nothing & the safe place to be would be Mexico so THEY cannot get anything. They also are gonna CONTROL everything!!
~Seems to me~~ we are THERE!!
He's also introducing 2 bills to be passed to gain control of the internet~~
1 = to have the internet SHUT DOWN should the U.S. be in an emergency status
2 = something else in regards of your privacy on the internet ~~
~it seems CONTROL is slowly taking over ;-<
These are the 2 bills:
Will new bill give Obama control of Internet? click below & find out:
Obama Drafting Bill to Take Control of the Internet!!!
Obama is passing new law to allow searching of PC's, Laptops, and media devices. click below & find out:
Obama Passing Laws to Search Citizen's Computers: Does this law ...
oops~~ won't let ya click on them
~ copy & paste into url box
~~ here are the 2 seperate bills;
Obama Drafting Bill to Take Control of the Internet!!!
Obama Passing Laws to Search Citizen's Computers: Does this law ...
oops again~~ Sorry
2nd bill to copy & paste:
Obama Passing Laws to Search Citizen's Computers:
getting scar-i-er;
~~ 2 other sites of interest:
Michael Savage: Obama Will Launch a “Reichstag” Terrorist Attack on America
Obama’s G20 plan kisses off Declaration of Independence
Rocco & PEACE2U:
Thank you both so much for keeping the rest of us informed about the diabolical plans of President Hussein. The fact that President Hussein is not a "real" citizen or from the "real America" and is a Communist, Nazi, socialist, Muslim terrorist is well known. But it's the "real Americans" like yourselves that help me sleep so well at night by keeping us informed about his plans to destroy America.
~sometimes~~ the TRUTH hurts~~ huh??
Goodnight cambridge
Their all in denial. America burns while Hussein and Libs fiddle.