GM CEO ousted in ‘change of direction’
TEXT OF INTERVIEW
Tess Vigeland: OK, so it’s a little more complicated than that and President Obama won’t actually be running General Motors. But Chrysler and GM have had months — some would argue years — to figure out how to have a future in the world auto business. They’ve had a mandate — since accepting billions in taxpayer bailout money in December — to come up with a plan. Or else. Well today the president announced it was time for the else.
BARACK OBAMA: Now we cannot continue to excuse poor decisions. We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars. These companies and this industry must ultimately stand on their own, not as wards of the state.
Rick Wagoner is out as CEO of General Motors. The administration gave Chrysler 30 days to work out a merger with Italy’s Fiat. Meanwhile the administration said the government will back all warranties issued by the automakers. Joining us with some more details is Austan Goolsbee, a senior White House economist and also a member of the administration’s automotive task force. Welcome back to the program.
AUSTAN GOOLSBEE: Thank you for having me.
Vigeland: Now the White House has said it was dissatisfied with GM and Chrysler’s progress in turning themselves around. What are they not doing?
GOOLSBEE: Well, in the plans they presented they embraced some of the restructuring that they are going to need to do. But if you sat down and look at the numbers, what the auto team believed is that they had not presented a plan that was truly viable to make them a profitable enterprise going forward.
Vigeland: What went into the decision to ask for the resignation of GM CEO Rick Wagoner?
GOOLSBEE: Well, the basic view that the president has had is that we need a change of direction. They need a new vision for the company. The government just can’t afford, as the president said, we’re not going to make these companies wards of the state to just keep them alive no matter what. The government can help them to restructure, but it’s not going to be in the business of running an auto company.
Vigeland: Now, I have to ask you because this is a question on lots of people’s minds today. Why was Mr. Wagoner forced to leave but the chiefs of Bank of America, Citibank, they’re still in charge of their companies.
GOOLSBEE: Well, I would say two things. One this is a situation in which we’ve had one round in which the auto companies received money to come up with restructuring plans and those restructuring plans did not go far enough. And now the president is outlining that they need to be more aggressive in their restructuring plans, and there needs to be new leadership and a new vision of where these companies are going. In many of the financial institutions, you have seen changes of leadership. At AIG, at Fannie, at Freddie, and at some of the others, so I guess I don’t agree that it’s really a distinct approach.
Vigeland: There are lots of auto dealers and parts suppliers who are pretty concerned about the changes at GM over the weekend. What can you tell them?
GOOLSBEE: Well, in the last week or two the government has recognized what the issues are facing these companies in restructuring and so it came out with an explicit support program for suppliers that would guarantee their payments in a variety of circumstances, so they would not be nervous about providing supplies to the domestic auto manufacturers, even if they were going through a restructuring. And you saw the president announce we’re putting the full weight of the U.S. government behind the warranties, the consumer warranties for these cars, and taking a series of other measures, that people should not view this as the end but instead as the beginning. That the effort is to try to put these companies on a path of viability, as opposed to becoming wards of the state that are just going to have to depend on tax-payer dollars to live.
Vigeland: Austan Goolsbee is a senior White House economist and also a member of the administration’s automotive task force. Thank you.
GOOLSBEE: Thank you.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
