Kneale: Sacrificing GM's Wagoner, and Fearing Obama

Dennis Kneale
CNBC Media &
Technology Editor

OK folks, chances are I won't get a word in edgewise on TV today to react to the Obama ouster of GM’s sacrificial lamb-in-chief, Chairman Rick Wagoner. Not with TV’s multi-headed hydra—the octobox of eight talking heads on screen at once—yapping away all day.

So lemme just point out ...

Yes, it's about time. Wagoner had been in denial about the auto industry's woes for far too long. He just wasn't scared enough. But if this IS the right move, um, then why didn't the REAL shareholders of GM—the big pension funds and mutual funds in particular—demand it long ago? Maybe because they felt Wagoner was doing as good a job as anyone could under impossible difficulties.

The bigger worry is this summary execution betrays a deep antipathy toward Big Business on the part of the Obama Administration. Lamentably, the president's henchmen may have imposed this coup mainly for reasons of image and example-setting. No wonder stocks are down big today.

Otherwise, how is it that GM is any better off run by Wagoner's doppelganger—Frederick “Fritz” Henderson, like Wagoner a GM lifer who helped preside over the automaker's years-long decline? Note that the two outsiders at the top of the industry—Chrysler’s Robert Nardelli and Ford’s Alan Mullally—are survivors, so far.

As long as taxpayers (with the White House as their proxy) are demanding resignations, why not force change at the top of the United Auto Workers? Its policies and recalcitrance clearly contributed to GM's collapse.

Labor helped elect Obama, so the UAW gets a pass. Too bad.

Some people in the auto industry will view Wagoner’s untidy firing as long overdue. A few years ago, at a private industry dinner, the CEO of a rival carmaker fumed to me about the GM chief: “Can you name any other CEO who has presided over a bigger loss of market cap?” He couldn’t understand how Wagoner had survived.

The GM leader unwisely passed up the chance to merge or ally with Nissan and its chief, Carlos Ghosn, no doubt in part to save his own job. When he first flew by private jet to Washington to plead for a federal rescue before Congress, he said he wouldn’t resign as a condition of getting the bailout. And he steadfastly refused to consider a Chapter 11 filing as a way out.

Now Wagoner is out of work and out of luck. Obama advisers are saying a Chapter 11 move may be the right course, after all. The president himself, on live TV, just did what the feds should have done months ago: He guaranteed the warranties for any cars bought from the ailing U.S. manufacturers.

So maybe Wagoner went down the wrong path: He should have pushed GM into Chapter 11 before seeking any government bailout. All pension obligations—one of the two crushing forces on GM—would have reverted to the federal government; all union contracts (the other crusher) would have been abandoned.

Rick Wagoner could have started over ... and he’d still have his job. And the rest of us in business wouldn’t have to now fear, rather than hope for, government “assistance,” or fret over whose head gets chopped off next.

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