Auto and financial stocks swooned today in reaction to Obama’s decisive action.
What was the Street thinking? Did it expect Uncle Sam to show up with never-ending wheelbarrows of cash at the corporate headquarters of GM and Chrysler? Obama finally showed taxpayers that he is in the driver’s seat when it comes to salvaging the car companies.
The battering of GM shares (down more than a buck to $2.60) is hard to understand. The shares should have soared now that Rick is out of the way. Wagoner is not headed for the Harvard Business School Hall of Fame any time soon.
The New York Times headline about his dismissal read: “The Steadfast Optimist Who Oversaw GM’s Long Decline.” The Wall Street Journal ran a similar item, carrying the headline of “Wagoner, With Knack for Survival, Finally Hits a Dead End.”
The former GM CEO presided over the loss of more than ten market share points, thousands of jobs and a stock price that traded at the $70 level. The guy had more lives than a cat.
From a PR perspective, Obama had no choice but to “fish or cut bait” with the “Troubled Two.”
Neither impressed Obama’s people with their viability plans and requests for billions of more tax dollars. The Chrysler bailout is especially irksome. Owner Cerberus Capital Management, which acquired Chrysler for a “song” from Germany’s Daimler, apparently doesn’t want to chip in a nickel for the automaker’s future. Since Obama put a 30-day deadline for Chrysler to iron out its much-talked-about alliance with Fiat, Chrysler now says it will focus like a laser beam on cementing that hook-up.
“No Drama Obama” has put more than a little drama in the auto bailout.
Obama should bounce some bankers next. The so-called populist rage, stirred up more by $165M in bonuses to AIG officials than the $180B bailout of the insurer (Go figure), will lessen a bit if the heads of Citigroup (Vik Pandit) and Bank of America (Ken Lewis) roll off the block.
Wagoner scores some points in my book for finally “stepping down” after GM was on the federal hook. Though it took time and nudging, Rick had the grace to do the right thing.
That’s more than can be said about the financial guys.
(Photo via Mlive.com)