Government Motors
IBD Editorials
Posted 07:11 PM ET
Commerce: Amid creepy assurances that the firing of GM's CEO Fritz Henderson was just business, evidence is piling high it wasn't. It was politics, and another reason why government must get out of the private sector.
The surprise "resignation" of General Motors Chief Executive Henderson Tuesday, coming on the back of silky assurances three weeks ago that he had the support of the board, and just hours before he was to keynote a trade show in Los Angeles, had all the earmarks of one of those government operations World War II GI's used to joke about for incompetence and absurdity: Close enough for government work. Catch-22. Snafu.
Not only did the GM board make a U-turn in its choice to lead the company on short notice, it didn't even try to spin its ham-fisted move, blandly calling it a desire to find a new "change agent."
Leaving the company headless, the board didn't think of having anyone else lined up to take the reins. In the great rush for "change," its chairman said without irony that GM would take a year to find a new CEO. Sounds like government work to us.
It points to an overbearing government presence in a distressed industry that's only making matters worse. Government can be arbitrary, driven by politics and addicted to power. This move against Henderson is like one Venezuela's dictator Hugo Chavez would make — and will have similar results.
It also echoes the barbaric treatment of Bank of America CEO Ken Lewis, who was denied a salary after a year's work and is now quitting without a replacement, and the near-resignation of Robert Benmosche at AIG, all because both firms have been subject to government takeover and meddling.
Henderson, 51, had been handpicked for the job by the board just eight months ago after it arbitrarily fired then-CEO Rick Wagoner.
Henderson was a GM lifer who "didn't fit in" with the GM board's political appointees. Unlike them, he knew the car business.
He pared the product line, stabilized GM's market share at 20% and turned a profit on some units. But he couldn't transform the company with a political board looking over his shoulder, cutting his salary to $950,000 and second-guessing his every move. Surprise.
The White House knows this and tried to conceal its hand. "This decision was made by the board of directors alone. The administration was not involved in the decision," a Treasury Department spokesman said. That's rich, given that the government owns 60% of GM after sinking $52 billion in bailout cash into the company. You can bet it owns the board.
So after all of those irrational moves, the hunt is on for a first-rate new CEO. Good luck getting one.
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