Why GM CEO Rick Wagoner Got The Boot
GM CEO Rick Wagoner was given the boot a few weeks ago by the Obama Administration. Why was this? The reason might surprise you.
General Motors has been a disaster for many years. The company has lost nearly $100 billion dollars in the last four years. The man helming the sinking boat has been CEO Rick Wagoner. Despite four years of dreadful performance, his position has never really been questioned. Well, that was until recently when he was asked to step aside by an Obama Administration trying to figure out how to save GM.
Experts Your Questions Now.
So, was Wagoner finally given the boot because of his incompetence as CEO? Not at all! The reason is more sublime. It has to do with leverage, appearance and pressure. You see, we are looking at a classic gunslinger standoff and President Obama just gave the two combatants on the other side of the standoff a confident wink.
Who are the parties in our bankruptcy standoff? Well, obviously we have President Obama who holds the political hot potato known as GM. The other two parties are the unions and the bond holders of GM. President Obama wants them to cut their interest so the company can avoid bankruptcy and survive. The union and bondholders risk losing everything if GM files bankruptcy, but don’t think President Obama has the nerve to do it.
From A Bankruptcy Lawyer Now.
The effective firing of CEO Rick Wagoner is the Presidents way of telling the unions and bond holders that he is dead serious. He is not going to pussyfoot around anymore and they better come to the negotiating table. It is a stroke of bravado and a pretty good one in my opinion.
Will President Obama prevail? Will the unions and bondholders give in? It is still unclear. My belief is Obama will realize there is no option by a bankruptcy filing. When that happens, the union and bond holders will rue the day they didn’t come to the bargaining table!