The Obama Administration has proclaimed TARP and the subsequent bailout for General Motors a great success. US Treasury Deputy Timothy Massad recently said, “Where we are today shows that the program, by any reasonably objective measure, was a success.” But is GM, now much derided as “Government Motors” the success that Obama says it is? Facts don’t argue in Obama’s favor.
First of all, we must dispense with the whole idea that a benevolent Obama played sugar daddy to “save” GM and did so without too much meddling with the company. Despite the claims that it is “back” and back in private hands, We The People still own 33% of GM. But government ownership is deeper than the a mere calculated percentage. You see, GM’s Board and its CEO were all placed in their positions by Obama, his czars and advisers. Worse, none of them have any experience at all in the auto industry.
Obama’s GM CEO, Dan Akerson, is not a “car guy” — as he himself admitted. Akerson’s experience is as a Wall Street hedge fund operator not an auto industry exec. He was also a player at the politically connected Carlyle Group and was the firm’s Managing Director.
Being a hedge fund guy, Akerson is much more familiar with short term, high risk investing practices as opposed to the long term thinking needed to run a car company.
Worse, Akerson has a history of running failing companies. Akerson was CEO of at least two companies that went into bankruptcy.
[Akerson] was until May of 2008 Chairman of the Board of Hawaiian Telecom – the company declared bankruptcy just seven months after his departure. He was also the CEO of XO Communications when it went bankrupt in December 2002.
Akerson isn’t the only non-car guy placed inside GM at Obama’s behest. By 2010, the federal government had replaced 10 of GM’s 11 board members with government appointees. Once again, none have any automotive industry experience.
Interestingly, even the 11th member of the board is a government appointee. Carol Stephenson was appointed by the Canadian government.
Still, many important and intelligent people are saying that TARP was a success. Despite the Administration’s proclamation, several members of the Congressional Oversight Panel beg to disagree. In fact, they think that the Administration has merely sowed the seeds for the next disaster.
The government’s efforts inside and outside of TARP have sown the seeds for the next crisis and, unfortunately, last year’s 2,319-page Dodd-Frank Act does nothing to fix these problems. Treasury must be more transparent regarding TARP. The real myth that the Treasury secretary should dispel is that TARP is a big win for the taxpayer.
These failures are the same sort of endemic problems that the administration has instilled in GM.
As Seton Motley noted in his Washington Examiner piece, none of the people running GM placed there by governments have experience in the sort of long term thinking that a car company needs.
Running a car company requires LONG-term thinking. Determining the right cars to design, make and bring to market is chess, not checkers. You don’t plan quarter-to-quarter or even year-to-year – you plan YEARS out in advance.
Just so. Yet none of the people Obama placed at GM have any of this expertise. Just as the bailout mentality has merely sowed the seeds for the next collapse, Obama’s GM appointees are just setting up the company for a fall later and all at the expense of the U.S. taxpayer.