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  • The Government and GM: How Reluctant a Shareholder?

    President Barack Obama speaks to the nation before General Motors CEO Fritz Henderson speaks to the media at a press conference to announce company plans to seek federal bankruptcy protection at the GM Building in New York City on June 1, 2009.

    Will the new majority owner of General Motors — the United States Government — take an active role in managing the firm as it struggles for viability? In a statement earlier today, President Obama insisted that the government wouldn’t impose it’s own political agenda on GM.

    “What we are not doing, what I have no interest in doing, is running GM,” he declared. Calling the government a “reluctant shareholder”, he declared that “GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality…They and not the government will call the shots and make the decisions about how to turn this company around… When a difficult decision has to be made like where to open a new plant or what type of new car to make, the new GM, not the US government will make that decision”.

    This sounds reassuring, but in fact this non-interference pledge was broken even before he started speaking. The White House was already trumpeting a pledge extracted from GM to “build a new small car in an idled UAW factory”, furthering the President’s environmental goals as well as pleasing his labor allies.

    This is unlikely to be the last case of active management from the reluctant shareholder. Already pressure is building from the left to limit GM’s manufacturing in China, and even from some Republicans to limit dealer terminations. Like a Cadillac in the living room, the government’s ownership of GM won’t go unnoticed, and the power it confers will be exercised.

    The only way to limit government control of GM is to limit government ownership. If ownership can’t be avoided, President Obama must at least establish a firm — and early — termination date, making clear when and how this company will be returned to private control. While such an exit strategy would not prevent the reluctant shareholder from becoming active, it would stop it from being permanent.

    Posted in Economics [slideshow_deploy]

    26 Responses to The Government and GM: How Reluctant a Shareholder?

    1. Lee Longchamp, Avon, says:

      A series of lies. Obama already has decreed the kind of cars GM will build.

      As part of the deal, GM will no longer buy some parts from China, but will build new plants in the US. That not only assures GM to be non competitive, but is the first protectionism step.

    2. E Michals, Glen Elle says:

      Where IS Henry Ford now thas we need him?

    3. Larry, in the Republ says:

      Dateline: June 1, 2009- I officially become an absentee shareholder of General Motors!!… 1).I have NEVER even rented a GM vehicle, much less ever paid money for the purchase of a GM!!! Why? They create vacuum! 2) Now by nature of the Congressional/Presidential High Treason against the Tax Payers of this nation,I am an unwilling, paying, "crutch" for a company I have no say in. 3)AS with Chrysler, GM has taken money that I pay to the Federal Government for the sole purpose of securing our borders, defending our interest and personnel abroad, funding road and bridge construction and maintenance, general infrastructure, support our Armed Forces and the like. No where does the defintion of Federal Income Tax and it's uses include using Federal Taxes to buy shares of private enterprise/business! Nowhere! 4)As for those who have cried, quite loudly, about only recieving $5 on a $1000(if ever matured) worth of shares purchased, I feel for you-I just can't reach you! I'm now FULLY vested, "involuntarily", into a car company I have ALWAYS detested! What's MY return on this investment? 5)I'm very certain there are other likeminded individuals,maybe call us rebellious, who will now NEVER buy a GM vehicle, simply to prove the point that GOVERNMENT CAN NOT force us to spend money(that's actually still in OUR pockets)on a product we never wanted in the first place! 6) I aplologize for takin' a 2 block comment and turnin' it to a 5 mile monologue….. I now digress….. Your actual mileage may vary. Allow 6 to 8 years for delivery. The views expressed in this commentary are not neccesarily shared by the owners of this board. The U.S. Government is an equal opportunity embezzler !

    4. Pingback: Say No To Socialist Cars « Nice Deb

    5. G Aramanda, Huntingt says:

      A relatively simple solution to the problem of government ownership of GM is to provide shares of stock in the auto companies (and other entities bailed-out by the feds) to the taxpayers on a pro-rated basis, proportional to the income taxes they have paid; Obama gets out of the business of managing any company, as the taxpayers will have the direct ownership of company stock. For simplicity's sake, let's say that the Feds have ponied up $100 billion to prop up an organization, and last year the Feds took in $1 trillion in federal income taxes. That would make each dollar of investment equal to one-tenth the income tax take for the year; each taxpayer would thus get ten cents worth of stock for each dollar in income tax paid. It would also serve the purpose of providing a huge stimulus, for those that think such a thing of value at this point, by providing millions of people significant sums of money in the form of corporate stock, which they can chose to hold on to or sell as they see fit.

    6. Barb -mn says:

      I, we, he, she, them, those, their's = no accountability. He's always been a liar. GM took the government bribe money = government ownership.

    7. Pingback: » Financial News Update - 06/01/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    8. Pingback: Who did Obama pick to handle the re-organization of General Motors? « Wintery Knight Blog

    9. Dave M., Michigan says:

      I'm sorry but when did it become a "UAW factory" and not a GM factory. That says it all.

    10. Normca says:

      Just words ! Obama it seems, is a serial liar. He tells his constituents he doesn't want to run a car company and then for the rest of us, whom he knows won't vote for him, he goes on to describe how he is and his Czar are directing GM. The Obama hand picked CEO goes on TV and repeats the line. The compliant media have always said GM was not building cars that the public wanted and so GM, headed by the white house will build cars they want us to drive. Then they withhold our resources, namely oil, under our own country, thinking the price of gas will prompt the purchase of small cars. That and the $7,500 tax credit provided. I hope that we show Obama his Socialist ways are not for America by voting to relieve his team of the majority, at least in the Senate in 2010 and show him the way back to Chicago in 2012.

    11. Tom Iowa says:

      In January they needed billions or the whole company would go under. Where did that money go? Now another 50 billion and close 12 to 14 plants costing over 21 thousand jobs. OH YEAH….You're doing a great job there B Rack, or should I call you Mister CEO……..? Get a real job in the real world buddy.

    12. John franklin, wisco says:

      "build a new small car in an idled UAW plant" Only the government would see this as progress.

    13. Al, The Villages, Fl says:

      Whatever his motivation,President Obama's concern was not GM or the taxpayers (and especially not the hard working pensioners who have retired) – obviously union payback. What he does is either payback for his backers or a move toward socialism. I, for one, will not support either Government Motors or Cry sler – they are a disgrace to the American Way. The new GM is built on misguided, faulty politics and will not survive. We should not throw more money at this enterprise – stop all bailouts.

    14. Larry, in the Republ says:

      Dave M. I'll take a shot at answering that for you. It became a "UAW Factory" when they(UAW), along with United Association locals, strong armed, or even suggested, that their membership vote for OBAMA! Hence, now we have the payback, or make that "payment", for their VOTE! How's THAT for a "compelling Personal story" to leave ya all tingly and feelin' right with the world at large? See the post comment I made on the other Foundry entry concerning "Reluctant Shareholders" for further thoughts of mine on this subject. Even as I write this Bobert Gibbs is pressin' a conference on C-Span denying the governments' involvement in ANY "Boardroom" decisions at GM. Then He turns right back around and states that "they" (the Obamanation) will decide some of "these" concerns during the restructuring of the next 60 to 90 days. Kind of sounds like "they" are being fairly active in the job that should be totally up to the Federal Bankruptcy Courts. Again, "they" just can't define where the Judiciary Branch actually gets to do it's intended job, and "they" stand down, nevermore to confiscate illegal control of corporate America!!!!

    15. walt - tampa says:

      agreed – we need an exit strategy with date certain much like what Mr. Obama expected with Iraq !

    16. Lynn B. DeSpain says:

      Even Crime wouldn't pay if the Government ran it!


    17. Bruce, Hillsboro Ore says:

      The treason lies not only with the President but with all the liberal people in our government as well as the liberal media.

      They mindlessly march goose stepping our country to ruin.

      We Americans need to speak up and vote out the rot.

    18. Ben C, Ann Arbor, MI says:

      How do you know when a politician is lying? Their lips are moving. Read "People of the Lie" by Scott Peck and Obama's personna becomes clear.

      Sadly, if GM goesd down the tubes the after shocks will be catastrophic. Too many automtive suppliers at risk. The culture of GM management has always been myoptic. The current bailout has Obama's social agenda attached to it whereas the previous bailout of Chrysler did not have an agenda – and Lee Iacocca repaid the loan ahead of schedule with interest. Given few will likley buy the Barrymobile I imagine the stock will remain at 75 cents a share – pretty worthless.

    19. Pingback: The Reluctant President Dives Right into Running GM : The Sundries Shack

    20. Ronnie B Albuquerque says:

      The only thing we the people don't own is the goverment and the white house. I guess we can't afford to buy them.

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    22. Ross writes, Flori says:

      The only automotive company left standing is the first automotive company, FORD. For years it was said that the name stood for "Fix Or Repair Daily" or "Found On Road, Dead". But it is now the only American privately-owned company left standing to build an automobile that the American people wants. Also FORD is continue to fuss with the UAW over quality workmanship, wages, benefits, retire funds, etc. not made an owners like the Chicago Community Organizer Socialist President did to Chrysler and General Motors before pushing them into bankruptcy where the innocent owners take a soaking. What a move! The union will now be able to fund the Democrat party for a very long time. I wouldn't buy a new Chrysler or GM vehicle from this time forward! Ever! Let them go out of business if that be the case.

      Bondholders and shareholders bailout and buy FORD!

    23. Bill, Florida says:

      So the government is now the major stock holder in GM. What stock do they actually own? I've been told my GM stock is now worthless. Shouldn't the government's and the UAW's stock also be worthless? What's wrong with this picture. Something smells here. All hail the dictator BO.

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