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Commentary: GM chief sacrificed because of Obama's AIG woes

  • Story Highlights
  • Frank Micciche: AIG controversy is behind GM chief Rick Wagoner's departure
  • He says Wagoner was a trophy on the wall for Obama's reformer image
  • President has taken on huge to-do list that tests his administration's ability
  • Handling the auto bailout is yet another item on growing list of chores
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By Frank Micciche
Special to CNN
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Editor's note: Frank Micciche is managing director of the Next Social Contract Initiative at the New America Foundation, a think tank that promotes thought from across the ideological spectrum. He has worked for Sallie Mae and for two former governors, both Republicans: John Engler of Michigan and Mitt Romney of Massachusetts.

Frank Micciche says Rick Wagoner had to go to re-establish the president's reform credentials.

Frank Micciche says Rick Wagoner had to go to re-establish the president's reform credentials.

WASHINGTON (CNN) -- In a recent interview on "60 Minutes," President Obama laughingly lamented that, "The only thing less popular than putting money into banks is putting money into the auto industry."

Explaining the dissonance between his mood and the grim reality of the situation, he cited the need for "a little gallows humor to get you through the day."

In that spirit, evidently, the president today issued a fiat to Chrysler that it immediately finalize negotiations on a merger or lose any possibility of future federal government support. And the company with which they are being forced to consummate the merger? Fiat, of course.

And so the Woody Allen movie that is the auto bailout continues.

The latest casualty in this tragic comedy is Rick Wagoner, CEO of General Motors, who was forced out this weekend. Wagoner was last seen in December, unfolding his 6-foot, 4-inch frame from a cozy GM hybrid vehicle as he returned to Congress to plead for federal relief.

He and his counterparts at Ford and Chrysler had, of course, made the indelicate choice to fly their corporate jets from Detroit for their first round of testimony, displaying a certain disregard for the unpopularity to which the president referred in his interview.

They returned, properly chastened, in the most environmentally correct vehicles they could find, and Chrysler and GM were rewarded with more than $17 billion in bridge financing. (Ford decided not to seek federal aid for the time being.) Alas, for Wagoner, and for Chrysler's hopes to remain independent, it was ultimately a bridge to nowhere.

Obama's news conference this morning marked the official release of a report by his Task Force on the Auto Industry that reviewed the automakers' plans for restructuring. The report, sanguinely entitled "A New Path to Viability for GM & Chrysler," had little good to say about the latter. According to its findings, Chrysler is too small, too dirty and too local to survive in a globalized industry where the real potential for growth is in emerging markets and smaller, fuel-efficient vehicles.

One wonders how Fiat took this assessment and what it might do to the size of its offer to merge, but such is the danger of seeking a high-profile line of credit from those who rely on the voters to maintain their own viability.

GM, on the other hand, won plaudits for the "material progress" it has made in restructuring operations, including the expansion of international auto sales, the development of a hybrid fleet and the steps taken to eliminate several underperforming lines of vehicles.

Why, then, seek the removal of the man who had launched these reforms? In the end, Wagoner's dismissal is much more the byproduct of the administration's woeful mishandling of bonuses paid to AIG executives than an objective analysis of the CEO's capacity to steer GM to recovery.

Wagoner was the largest trophy available to mount on the president's wall in an effort to restore his credentials as a reformer. For as much positive change as he had brought about at GM, he could never quite remove the taint of his 30 years within the company and his arrival on that private jet.

A dead man walking since he disembarked, his sentence has now officially been imposed. Along with Wagoner, a majority of the board of directors will soon depart at the administration's request.

Displaying the overwhelming faith in their own abilities that has quickly come to characterize the Obama administration, the task force report promises "an increased effort by the U.S. Treasury and outside advisors to assist with the company's restructuring efforts."

Having promised to make health care available to all Americans, to guarantee a college education for every eligible student, to curb global warming and to restore stability to the financial markets, the president has added the task of "automotive industry restructuring assistance" to Timothy Geithner's growing list of chores, even as the Treasury secretary struggles to fill several senior spots on his own staff.

If that weren't enough, Obama also announced that the federal government will put up nearly 90 percent of the money needed to create a warranty service fund for new domestic vehicles and will commit to fulfilling the warranties if a manufacturer goes out of business. All that remains, it seems, is a "restructuring" of the automaker's name to Government Motors.

Despite the president's solemn pronouncement this morning that "the U.S. government has no interest in running these companies," the success or failure of GM, Chrysler and the thousands of downstream entities that exist to serve them is now firmly on the plate of the Obama administration.

Extricating the government from the unprecedented relationship he has struck with the automakers, and restoring consumers' faith in their long-term prospects as something other than wards of the state, will require a level of executive acumen that the president has yet to display. And that's nothing to laugh about.

The opinions expressed in this commentary are solely those of Frank Micciche.

All About General Motors CorporationRick WagonerBarack Obama

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