Rick Wagoner, the General Motors CEO that came to symbolize everything that was wrong with the ailing auto maker, is being forced out by the Obama administration according to news reports.
The White House has issued deadlines for both GM and Chrysler to meet if the companies want to continue to receive loans to stay afloat, according to, among others, Reuters. Chrysler is being given 30 days to cement an alliance with Fiat. If it does, the government could issue $6 billion more in assistance.
GM is being given 60 days to restructure, but as part of the deal, Wagoner has to go. Official word is expected tomorrow. In asking Wagoner to leave, Obama is also likely trying to strengthen the perception, after the AIG bonus debacle, that his administration is going to be tough on executives who made large amounts of money while their companies struggled.
"Mr. Wagoner has been asked to resign as a political offering despite his having led GM's painful restructuring to date," said U.S. Rep. Thaddeus McCotter, a Michigan Republican and member of the House Financial Services Committee, according to Reuters.
Both GM and Chrysler have until March 31 to provide plans to the U.S. government that they can become viable in the long term. The deadline was agreed to under the Bush Administration last year. If the companies can't show that, the government can, along with not giving more money, ask for the $13.4 billion already loaned to GM and the $4 billion loaned to Chrysler back.
Wagoner has spent 32 years at GM and became CEO in 2000. It's been a downhill ride. Since 2005, the company has lost over $80 billion and dropped to No. 2, behind Toyota, last year. Toyota's surge came because of the Prius, a car that in some ways grew out of fears among Japanese automakers in the early 1990s that the U.S. would carve out a leadership in hybrids (Ford, GM, Chrysler and the DOE had launched a hybrid program under President Clinton). Instead, U.S. automakers focused on fuel cells (still a non-starter), flex-fuel vehicles that can run on ethanol (good idea, but few ethanol stations exist) and good ol' SUVs.
Last year, Wagoner, along with the two other CEOs of the Big Three, showed up in company jets to ask Washington for money.
But give Wagoner this: He looks and acts like a CEO. I interviewed him in 2008. It was like talking to John Forsythe straight of the set of Dynasty.
Ford, the other big U.S. automakers, isn't participating in these loan program and thus doesn't have to meet the deadline.