In Detroit, Obama Administration Takes the Wheel

By
Rick Wagoner. Photo: Getty Images

In a move partially designed to stave off another AIG-like crisis where failed executives continue to be rewarded with taxpayer dollars, the Obama administration has asked GM CEO Rick Wagoner to step down. The request came on the heels of news that the president's auto team had assessed the continued viability of GM and fellow Detroit automaker Chrysler. Analysts said that even with the optimistic forecasts submitted by the car companies, GM needs more cutbacks, and Chrysler does not have the ability to continue to operate as a stand-alone company. The administration ordered the latter to reach a deal with Italian automaker Fiat in the next 30 days or face no further government aid (if a deal is reached, there could be an additional $6 billion made available). GM has 60 days to sharply cut costs and lay out a new plan for viability, during which time taxpayer money will keep it afloat. In order to maintain consumer confidence and sales, Obama also announced a new program to back warranties. The goal is to make buyers more confident in the American-made cars they plan to buy or already own. You know, like from the movie Dave. Except, you know, without the farcically pat, happy ending.

U.S. Moves to Overhaul Ailing Carmakers [NYT]