Sunday, March 29, 2009

Obama Forces GM's Top Executive to Resign

The Chairman of the Board has spoken, and the CEO is gone.

President Barack Obama asked for General Motors chief executive officer Rick Wagoner to resign, and he has done so effective immediately, White House officials are telling national news outlets tonight.

Obama is expected to announce his latest auto industry strategy tomorrow, including a response to GM and Chrysler's plea for more federal money.

"We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement," GM said Sunday night in an official statement to media.

Wagoner has been CEO for eight years and at GM for more than 30. It is not yet clear who would replace him, or what role the administration would play in that process.

Reaction has been swift to the surprise move. "Mr. Wagoner has been asked to resign as a political offering despite his having led GM's painful restructuring to date," said U.S. Rep. Thaddeus McCotter, a Michigan Republican and member of the House Financial Services Committee, told Reuters.

We had feared the Obama administration may force some of the executives out. But we don't really see how this would make GM the better, stronger company that Obama wants it to be," said Rebecca Lindland, director of IHS (nyse: IHS - news - people ) Global Insight.

University of Maryland economist Peter Morici, a one-time critic of Wagoner who had called for him to resign but more recently thought he was doing a better job, said the administration has a "PR problem" regarding corporate bailouts.

"They are bailing out just about anybody that shows up and says they need cash. The public has grown weary of it and instead of throwing a banker to the wolves they have decided to throw Wagoner to the wolves," Morici said.

There was no indication on who would succeed Wagoner, or what Obama's role would be in picking the new leader for the auto giant.

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