Bean counters have always had a say and it’s quite likely the bean counters are going to have a say even with that lady in charge.
It’s stated that she’s been at GM 30 something years with engineering. When Bob Lutz took over at GM he said that he wanted heads to roll over the Aztek thing but no one would ever 'fess up over their involvement.
So that brings up the question of whether she was involved… 
One if the knocks against her is she hasn’t been involved in product development, so she may actually be blameless in the Aztek debacle.
Having a say in how/what to produce is one thing. Being in complete control is something else.
Jt, my philosophy on this is that the market stays stable; if it’s a million sedans a year, and four million doors need to be made, it matters not whether those doors are GM doors shipped to Canada or Accord doors shipped to Ohio. The activity in the market was not affected by the bailout. What the bailout does is allows a poorly run, noncompetitive producer to continue in the market rather than having its business shifted to more efficient producers. Bailouts do not make a marketplace or an economy healthier. They make it less efficient.
If a no longer competitive producer drops out of a market, more competitive producers will always fill in the void. In the case of GM vs. Honda and Toyota, it’s entirely possible that more of the manufacturing activity would have remained in the U.S. had GM not been bailed out and Honda and Toyota filled in the marketplace hole. They employ more people in the U.S. than GM does.
And I should add that bailing out fed selected private companies is not, IMHO, a valid purpose for taxation. IMHO the real purpose of the bailout was to gain the union’s backing.
The bottom line was, GM had billions of dollars in holdings, including plants, dealerships and commercial enterprises. There were no buyers and NO PRIVATE entity was making a move to buy or loan monies to make payroll and keep it running… If closing or bankrupcy filing would not have a ripple effect as decided in other cases where companies were not bailed out, nothing would have been done. The govt. has let other companies go under as @MikeInNH has pointed out when it was decided the strategic interest and the effect to the public at large did not warrent it .
The fed selects who to bailout for education loans and grants. It selects who bailout with small business loans. FEMA selects what businesses it will help as well if struck by national disaster.do we get that the federal govt. helps private enterprises survive in a miraid of ways. All of the time. Is that a new revelation just because they did it with GM ? It’s been going on for decades. Now, it all boils down to another “union scare”. Like, unions, you know, made up of workers shoud be feared more then asbestos and cigarette manufacturers.
Just because the Fed’s have done it in the past doesn’t mean they should keep doing it.
When the Fed’s make a decision to bail out a company or industry…it’s a very very very small select group of people making that decision. By letting the market determine if a company fails or strives…is usually the decision of thousands or even MILLIONS of people.
I would not care if the people making the bailout decision were doing it with their own money. But they’re not. They’re using tax money. It’s easy to decide to bail a company out if you’re using someone else’s money. Especially if they point out that they control enough votes to keep you in office.
“By letting a company fail or strive…is usually the decision of thousands or even MILLIONS of people.” Well said. And those millions of people made the decision with their own money, by their purchasing decisions. That is the only money that should determine whether a company prospers or fails.
Bailing out a company is much like rehabiltating a drunk or drug addict. The hope and purpose is to get that person back on his or her feet so they can be productive citizens. That’s cheaper than having them on permanent welfare.
Lee Iacocca helped bail out Chrysler years ago and it emerged a better company and created a lot of new products, such as the minivan. The old Chrysler under Lynn Townshend, an accountant, was clueless and ventured into Europe by buying the Rootes Group, a sick UK company, and Simca, an equally sick French company. It too ignored what Asian companies were planning to do. The later joint venture with Mitsubishi was too little too late.
We all hope that GM has learned its lessons and will be a leaner and more customer responsive company and that product excellence will rule together with fiscal prudence.
As late as the late 80s GM firmly beleived it had nothing to learn from Japanese car makers, and that automation would save the day. Roger Smith will go down in history as the least knowledgeable car guy ever to head up a major manufacturer.
There would have been NO CHRYSLER for Lee Iaccoca if they hadn’t receive loan guarantees from the govt. Lee didn’t bring any money with him.
Interesting analogy, Doc, but I would argue that it’s more like enabling a drunk or drug addict by insulating him/her from the consequences of his/her substance abuse.
Chrysler’s use of the bailout loans was exceptional, but I disagreed at the time based on principle and I still disagree. Interestingly, he wrote at length in his autobiography that the way he got the government loan backing was to go to each of the key representatives with hard data showing exactly how many of their constituents would let go if they did not approve the bill. The issue of whether it would have an overall effect on total industry employment was, needless to say, not addressed in those meetings. He was a brilliant strategist.
He also really did make changes to the way Chrysler was operated. He put union heads on the board of directors, he opened up the numbers to them and said plain out “I don’t have jobs at the rates you’re demanding; I DO have jobs at the rates I’m suggesting.” Since they were on the board and had unimpeded access to the actual numbers, they had no leg to stand on. I’ve seen no such changes at GM. Nor do I expect to.
Lee Iaccoca was one of history’s truly great automotive geniuses, IMHO. I don’t see that in GM anywhere.
@dagosa Think POSITIVELY! The point I was making was that Lee Iacocca knew how to turn Chrysler around and made really good use of the LOANS, which were repaid with interest. The money was actually forwarded by 7 BANKS with federal guarantees. That bailout cost American citizens nothing!
Roger Smith would have been completely incapable of such a feat since he knew little or nothing about cars, and nothing about the fact that human beings are your most important asset, not computers and robots.
First, it wasn’t an Obama plan. It was made and also approved under Bush, passed by congress and signed into law by Obama.
Secondly; we were going through a recession at the time.
Third; If you look at the number of jobs saved and to number of jobs created, it was worth the $78 it cost each tax payer spread out over several years
It was not a Rep vs Dem issue as Faux News listeners would have you believe. It was an attempt to save jobs in a strategically important industry at a very critical time; and MOST went along with it…for $78 spread out over several years.
Fouth: bankruptcy was considered, but again, do to the timing of the recession was set aside.
In November 2008, the three major U.S. auto industry companies – GM, Chrysler and Ford – asked the government for a $50 billion bailout to avoid bankruptcy. The Big 3 stated that their demise would trigger three million layoffs within a year, plunging the economy further into recession. Ford didn’t really need the funds, but asked to be included so it wouldn’t suffer by competing with subsidized companies. Congress initially refused, saying that the automakers needed to fine tune their request.
The Big Three came back in December 2008 with a request for $35 billion. Congress opposed the bailout, saying U.S. automakers brought their near-bankruptcy on themselves by not retooling for an energy efficient era, reducing their competitiveness in the global market. Congress first explored whether a planned bankruptcy reorganization was the best alternative for the companies, but realized that would take too long to implement. Congress was divided on whether to use the $700 billion bailout funds, instead of the $25 billion available from an Energy Department energy-efficient loan program. President Bush and Treasury Secretary Hank Paulson ultimately agreed to the bailout.
Five years later, the government recovered $54.6 billion as of the end of October 2013. In return, more than 340,000 jobs were created by GM and Chrysler since June 2009,
So @MikeInNh “think positively” ???
What did I say that was wrong ? The govt, our tax money WAS on the hook for the full amount. When Chysler succeeded, the loan was payed back in full to the banks so no money was lost. But, had they not succeeded, just like GM in 2008, the tax payer would have to be on the hook for the full amount. …Lee would have had NO company to work with, without govt. intervention.
ie. Without govt. backed loans. The govt. does this often when they need to. It’s called DEFICIT spending and they use private funds when they don’t want it to show on a budget request. This then can be done more easily as opposed to budgeting it directly.
THE END IS THE SAME. the tax payer is on the hook and it’s still referred to as a bail out.
The reason why GM wasn’t handled this way was THERE WAS NO MONEY IN THE BANKS TO LEND ! A recession was transpiring !
GM was one of the world’s largest companies, and had dominated the world for decades. If they screwed it up so badly that they were no longer considered a viable risk by the financial community, they should have suffered the consequences that the rest of the manufacturing community in a capatilist system has to live with.
Chrysler truly did a great job digging out. GM did not. They said in a commercial that they’d paid us back, but it was instantly shown to be a bald-faced lie. I saw the commercial. It was withdrawn almost immediately, as soon as the internet community disclosed it as a lie.
The end is not the same. Chrysler was government backed loans, on which we had to cover not one dollar, and Chrysler truly did change. GM was a bailout, on which we lost over ten billion dollars, and I don’t see any signs that GM has changed a doggoned thing. Doesn’t sound the same to me.
By the way, I disagreed with the Chrysler loan backing too, on the same principle that it isn’t proper use of taxation.
When GM was asking for the bailout, there were no good answers. The choice was a loss of many, many jobs, or corporate welfare. I think the bailout could have been negotiated with more favorable terms for the government, but that’s just my opinion.
But that’s all water over the dam. Rather than focusing on the past, we should try to learn from it.
And I think the lesson here is that the company should have been required to make good on 100% of the loan - and then some. That the shareholders should NOT have expected their investment to be yield good returns. That the management (and the former management) should have suffered the consequences of their poor decisions.
And the last lesson is that we need to get corporations out of the political arena. Big money talks!!
@CR,amen.We are sittng ourselves up for a situation that is going to rival the happenings after the “Treaty of Versailles” only a little different,when certain groups get in control of most of the money,it foments a situation were radical groups can seize a lot of power-,more to be said ,but I will not say it(dig through the real History books,not the sanitized,Victor written ones)-you have been warned-Kevin
Chrysler received govt. backed loans too, or they would have been under years ago. Chysler then received the same bailout from TARP funds as GM though not the same amount in 2008. I don’t get where they did a geat job long term. They fell back into the same rut of cruddy cars as GM. They did not expand into home mortgages. The temporally make some good products after the first bailout. It was BUSH approved funds allocated to the banks that was shifted to the auto bailout.IT WAS NOT ADDITIONAL FUNDS BUT FUNDS FROM THE BUSH TARP 700 billion, previously approved funds for the banks…please read synopsis and reference !
@same
Govt. backed loans ARE THE SAME as the govt loans direct as far as the tax payer is concerned. Read the synopsis. GM had to receive direct loans FROM TARP because there was no money for the banks to lend during the recession. Chrysler is much smaller then GM where GM had expanded into GMAC which included home mortgage loans which was the big conundrom preventing them from making enough profit. More jobs were saved by saving GM then Chrysler. Chrysler went through two bailouts. GM one.
@capriracer
The choice was real welfare and higher deficits cost during a recession. There was a severe recession going on caused by lack of oversight of banking practices for 8 years. The compassionate and sound economic sense during the 2008 bailout was to keep as many people working as possible. So, if a company does not make good, do you send them into bankrupcy now ? No, it is a capital expense that showed dividends in an economic senses that saved taxpayers billions nd saved many jobs during a recession. When the word compassion and long term savings are involved, tea party right winger’s eyes just glaze over.
@Dag,they still alive!-Kevin
Of course you can find examples of where it worked…SO WHAT? It’s called 20/20 hindsight. Chryco could have easily failed. There was not guarantee that Chryco would succeed.
Had it not been for the recession, there would have been plenty of money for both GM and Chrysler to keep building their crappy cars. Conservative’s want to blame a bailout for their tax burden when in reality, it was 8 years of administrative mismanagement and lack of govt. oversight that lead to a recession that lead to the central govt. making the decision it did on the bailout. Keep your eye on the ball hard right conservatives. But look in the mirror when you do. The debate is not, do we tax people more to bailout auto makers, but do we use funds dedicated to banks and shift them to auto companies. The Obama administration made the decision in requesting that shift based upon the need of the regular American over the wealthy. This is the same argument that goes on now. The conservative still supports the Wallstreet wealthy over the middle class and try to disquise this argument with Faux News idioms.