GM: Government Motors?
Is the government overreaching as it works to bail out the auto industry? Has the line between helping and hurting been blurred beyond recognition? Is the government's involvement both a blessing and a curse?
What kind of precedent is being set, and what does it mean for the future of private business?
From Business Week concerning the government's role in the restructuring of GM:
Make no mistake: The White House and the task force overseeing the restructuring of both GM and Chrysler since February are calling the shots. The latest GM plan unveiled on Apr. 21 to slash more jobs and dealerships, shut down the Pontiac brand, and swap up to $27 billion in unsecured debt from bondholders for equity has heavy government input.
Treasury has a couple dozen staffers and executives from Boston Consulting Group (BCG) scrutinizing operational details at the car company. (BCG is getting paid $7 million from the government for its work on both GM and Chrysler.) Auto task force leaders Steven Rattner and Ron Bloom, both seasoned investment bankers, talk to GM CEO Frederick A. "Fritz" Henderson almost daily, weighing in heavily on big financial decisions.
Elsewhere in the company, GM managers say they are encountering all manner of suggestions from the government. Henderson, who disputes the idea that the government is micromanaging, does liken Washington's role to that of a "private equity player" with ultimate veto power over its investment...
Check out the full story here.