General Motors only filed for bankruptcy on Monday, but already the skeptics who said a government controlled automaker was a recipe for disaster are being proven correct.The Wall Street Journal reports (subscription required) that "Top executives of General Motors Corp. and Chrysler LLC defended plans to cut thousands of car dealerships at a congressional hearing where senators questioned whether the dealers were being unfairly treated in the companies' downsizings."
In its role as the soon to be largest shareholder of General Motors, the United States government has a responsibility to monitor the company and its policies as they pertain to the interests of shareholders -- executive compensation, capital structure, board make-up, corporate governance, etc. But when was the last time you saw an activist investor complain about the way underperforming dealers at a company were being treated? I'll give you a hint: It's never happened.
If United States taxpayers are to get back a single penny of the truckload of cash we've dumped into GM's coffers, our elected officials better get their priorities straight: The decision to shut down dealerships was a business decision made in the best interests of the companies' long-term shareholders. If the United States government is going to haul executives into Washington to explain themselves every time they make a business decision that has some negative externalities, GM's turnaround will go about as well as Vanilla Ice's comeback album.
This is very, very scary stuff: We have too much invested in GM for the management of the company to be co-opted by pet causes, special interests, and even well-intentioned concern about people losing their jobs. If General Motors is to be saved, the company's management will need to focus on running the business -- a tall enough order by itself. If elected officials continue mixing politics and business, we are all in a lot of trouble, and so is GM.
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Reader Comments (Page 1 of 1)
6-04-2009 @ 9:50AM
Miguel said...
And all the Obama voters are finally starting to wake up and smell the coffee. Heck even Ted Rall is calling for his resignation. This president and his party is in bed with the UAW. And everyone's acting surprised as this all plays out?
6-04-2009 @ 9:56AM
Sheldon L said...
Bravo Zac
6-04-2009 @ 11:18AM
jimrockford said...
Better US Government owned than Chinese owned
6-04-2009 @ 11:20AM
dmsm95363 said...
We will fall into an abyss of third world nation~prepare, the time is near.
Please allow the ink to dry on the BK application Zac. If one guesses that a few weeks of planning and presto the BK of GM is all put in place by a political parties team, then I have a 'bridge' to sell you in Brooklyn.
Bravo for the inciteful rhetoric.
6-04-2009 @ 2:13PM
Mark said...
"underperforming dealers "? I have not seen that to be true - some of the most successfull dealerships (of ALL dealerships) here in Alabama, have been shut down. Why? It makes no sense to me. What does GM & Chrysler gain by closing established, high volume dealerships?
6-04-2009 @ 3:02PM
ij70 said...
Poor Mark. They were shutdown because they were selling cars on credit. When they ran out of credit, they also ran out of customers. The fact that you in Alabama is very telling.
6-04-2009 @ 6:49PM
LG said...
".....some of the most successfull dealerships (of ALL dealerships) here in Alabama, have been shut down. Why?"
Because they were ALL found to have made contributions to the Repub Party and Obama wants them out of the way....along with other high-volume dealer/contributors in other states.
6-12-2009 @ 4:04AM
ADAM ROBERT ROACH said...
I'm sooooooooo sick of all you boneheaded Obama-bashers (Sour grapes!) and his handling of GM's meltdown and all the other issues you people are whining about. Obama didn't create this shituation. It all happed during Dumbya's reign of terror. You Repugnicons make me violently ill. As for the rest of you who are comparing Obama and his methods to tyrany and facism,HAVE YOU got a BETTER plan to get us out of the f*cked-up mess Herr Bushler helped create?? I DIDN"T THINK SO!