Obama Administration Protecting Taxpayers on GM

I read William Holstein's opinion piece in the New York Times today. Mr. Holstein makes several good points about the turnaround to date at GM. Progress has been made, and Rick Wagoner deserves credit for that. However, the real track record of GM over Wagoner's nine year tenure, and especially the company's slow-moving turnaround, suggest quite a different conclusion.

I reviewed the task force critique on a previous post and it's clear that GM will not meet its own, recent, turnaround targets. Something needed to be done, and it was.

What has everyone up in arms is the role of the government. However, in principle there is nothing different here than has happened many times before - a powerful stakeholder on whom a company is dependent flexes its muscles and removes the CEO. Ordinarily, we call stakeholders that act in this way "private equity investors," or "activist investors," or even a good old fashioned effective "board of directors." None of these catalysts for change are available today, so in comes the government.

I too worry about the government running GM, but in this case they are not. They are simply fulfilling their fiduciary responsibility to their own shareholders (read taxpayers and citizens). It's too bad GM's own board couldn't have done the job themselves.