GM CEO's Resignation: Part of a White House Power Grab
{{#rendered}} {{/rendered}}This is a rush transcript from "On the Record ," March 30, 2009. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight: President Obama takes the wheel, telling the GM CEO to move over and get out right now. This as GM and Chrysler to teeter on the brink of collapse. President Obama says no to the restructuring plan submitted by the two bailed-out auto makers. President Obama also says the government has no plans to run either of the bail-outed companies. But then why did the president tell the GM CEO to resign? And what is Wall Street's reaction to this strong-arming? The market may not like the news too much. The Dow plunged 254 points today.
Joining us live is Steve Moore, economic writer for The Wall Street Journal. Hi, Steve.
{{#rendered}} {{/rendered}}STEPHEN MOORE, WALL STREET JOURNAL, "THE END OF PROSPERITY" CO- AUTHOR: Hi, Greta.
VAN SUSTEREN: All right, do you believe it, that when the president says the government has no interest to want to run GM, or do you think he's...
(CROSSTALK)
{{#rendered}} {{/rendered}}MOORE: If they don't want to run GM, why are they firing the CEO? I mean, I think we are moving very much to an environment where Washington is going to run this car company. And you know, a lot of these people...
VAN SUSTEREN: Well, who's so good at running...
(CROSSTALK)
{{#rendered}} {{/rendered}}MOORE: ... can't even run a lemonade stand, let alone a car company.
VAN SUSTEREN: All right, so we now that the GM -- I mean, the CEO didn't do a very good job...
MOORE: Yes, he deserved to be fired.
{{#rendered}} {{/rendered}}(CROSSTALK)
VAN SUSTEREN: Who at the White House or Treasury is so capable to run this?
MOORE: Well, that's the big question. I don't think any of them are. And this is a -- this is a problem that we have with all of these bailouts, with the banks, with the insurance companies and now with the car companies. We now have -- we have moved to the system where Washington, D.C., is the financial center of the world, and it's now running banks. It's running car companies. And these people simply aren't -- aren't fit to do that.
{{#rendered}} {{/rendered}}VAN SUSTEREN: Well, sort of the interesting thing about that -- if they had been thrown into bankruptcy last fall, or even if the president called the loans now...
MOORE: Right.
VAN SUSTEREN: ... and pushed them into bankruptcy, there's this incredible system that's worked for decades, called the bankruptcy court system.
{{#rendered}} {{/rendered}}MOORE: Right.
VAN SUSTEREN: That's -- that's very organized. They do it all the time.
MOORE: That's right.
{{#rendered}} {{/rendered}}VAN SUSTEREN: They do the restructuring. So why...
MOORE: I'll tell you why it didn't happen.
VAN SUSTEREN: OK, why didn't it happen?
{{#rendered}} {{/rendered}}MOORE: It's three letters, UAW. And that is if this were thrown into bankruptcy, then all those union contracts, in my opinion, would have had to have been renegotiated. They would essentially have been null and void, if you're in -- if you're in bankruptcy.
VAN SUSTEREN: Which would mean that -- OK, which means...
MOORE: So this bailout of Chrysler and GM was, in my opinion, mostly a bail-out of the United Auto Workers and the protection of those jobs. But here's the problem that I have with that. And look, I own American cars. I only buy American cars. But the problem I have with this is -- because we have -- we are now talking about potentially putting $100 billion into these two companies. For that amount of money, we could pay each one of these workers $500,000 to just go away and never produce a car again. So the amount of money we're putting in these companies is enormous, given their small real value right now to the U.S. economy.
{{#rendered}} {{/rendered}}VAN SUSTEREN: All right, we gave them $17.4 billion loan...
MOORE: Right.
VAN SUSTEREN: ... already.
{{#rendered}} {{/rendered}}MOORE: That's right.
VAN SUSTEREN: OK, we did that last, what, December?
MOORE: I'm going to (INAUDIBLE)
{{#rendered}} {{/rendered}}VAN SUSTEREN: In December. All right. Has there been any improvement...
MOORE: No.
VAN SUSTEREN: ... since December? OK, now that matters because...
{{#rendered}} {{/rendered}}MOORE: Right.
VAN SUSTEREN: ... that suggests to me that -- I mean, if there'd been some improvement, then maybe we're on the right track. No improvement.
MOORE: Well, here -- here's the -- yes, that's...
{{#rendered}} {{/rendered}}VAN SUSTEREN: So that...
MOORE: You know, it's been a tough time for all the auto companies, so I'm not so sure that you can really...
VAN SUSTEREN: Well, I mean, I was asking for a little sign that it's a good idea.
{{#rendered}} {{/rendered}}MOORE: I haven't seen anything. Look what happened to the -- by the way, look what happened -- if this was such a great idea to bring in new management, which I think was probably necessary, why did -- GM's stock fell again by a significant -- about 25 percent today?
VAN SUSTEREN: All right...
MOORE: I predict, by the way, if we keep on this path, pretty soon, you're going to have GM really dictating what kind of cars -- I mean, the Congress and the president dictating what kind of cars they should make...
{{#rendered}} {{/rendered}}VAN SUSTEREN: Right.
MOORE: ... what color they are, the gas mileage they get. And again, do we really want our Washington politicians to be running and operating a car company?
VAN SUSTEREN: Well, the -- another issue, though, is the whole -- whole idea of the unions, is that one of the problems, if they'd gone into bankruptcy, those union contracts would be renegotiated.
{{#rendered}} {{/rendered}}MOORE: Right.
VAN SUSTEREN: And I think what really sticks with a lot of American people is these job banks...
MOORE: Right.
{{#rendered}} {{/rendered}}VAN SUSTEREN: ... where this 1984 contract...
MOORE: That's right.
VAN SUSTEREN: ... which has been -- is that they have thousands of unemployed auto workers...
{{#rendered}} {{/rendered}}MOORE: Who are being paid.
VAN SUSTEREN: ... who get paid full...
{{#rendered}} {{/rendered}}MOORE: That's right.
VAN SUSTEREN: ... because of the job bank. They go -- they don't -- they don't do any lick of work, but under this contract, they get a full price.
MOORE: Right. And...
{{#rendered}} {{/rendered}}VAN SUSTEREN: So how can a company even survive paying something like that?
MOORE: That's the problem, and I think...
VAN SUSTEREN: And if President Obama won't throw them into bankruptcy, call those loans...
MOORE: Right.
VAN SUSTEREN: ... so it's restructured, that we're just going to do another whole round.
MOORE: That's right. And a related problem is just the health and pension benefits to the people who aren't even working at GM...
VAN SUSTEREN: Well, but they...
MOORE: ... the people who are retired...
VAN SUSTEREN: ... did the time, though.
MOORE: Yes, but...
VAN SUSTEREN: The retired people...
MOORE: But those are really high costs. You're talking about $2,000 or $3,00 per car that you buy.
VAN SUSTEREN: I don't feel as bad...
MOORE: Those are legacy costs.
VAN SUSTEREN: Yes, but...
MOORE: I mean, it makes it very difficult...
VAN SUSTEREN: If you've got a 75-year-old person...
MOORE: Right.
VAN SUSTEREN: ... who's working at -- who's not going to be able to go out and get another job...
MOORE: Right.
VAN SUSTEREN: ... and this was the deal they cut, I don't feel...
MOORE: No, I agree with that.
VAN SUSTEREN: ... as bad about that. But this situation...
MOORE: But here's the problem...
VAN SUSTEREN: You've got people in these job banks who could work.
MOORE: Right.
VAN SUSTEREN: And they're getting paid full.
MOORE: And they're not working, right.
VAN SUSTEREN: That's different.
MOORE: You don't have to just -- and it's not just UAW. It's the General Motors management that agreed to those labor contracts in the first place. Now, Senator Corker...
VAN SUSTEREN: Yes, but...
(CROSSTALK)
MOORE: ... he represents Tennessee, where you've got a lot of car companies that are foreign auto companies that are paying the workers -- that are paying the workers about half of what GM and Chrysler workers get.
VAN SUSTEREN: But the buck stops with the president. The president could have fixed that today, and he maybe will do it by tomorrow...
MOORE: That's right.
VAN SUSTEREN: ... by pushing them into bankruptcy so those could be renegotiated. Instead, from what you say, he's coddling the unions, so that...
MOORE: I think so.
VAN SUSTEREN: And what's going to be is we're going to do another whole round. If the $17.4 billion didn't show any sign, even a tiny sign of improvement, why should putting more money in and delaying the inevitable of -- of bankruptcy -- why is that a smart idea?
MOORE: Well, it's not a smart idea. I mean, at some point, if the companies can't cut it, then they have -- look, we have a third car company we haven't even talked about which is Ford. Ford has not taken a penny of government money, and I actually think Ford is looking the most profitable of any of them. Plus, we have Honda and Toyota. We've got plants all around the country that hire American workers. They don't get bail-out money, either.
VAN SUSTEREN: The Down went down 250 points. Coincidental or related to this, do you think?
MOORE: Maybe related. I mean, whoever knows. But it's interesting that the GM stock went down. This was supposed to be a salvation for them. I predict that you're going to see another stream of bailout money, some economists are predicting as much as $100 billion into this company.
VAN SUSTEREN: Well, if any of the $17.4 billion were even just a tiny little improvement...
MOORE: Right.
VAN SUSTEREN: But maybe there is, but we don't...
MOORE: Well, one good point is that this week, Chevy is rolling out their new Camaro, which is one of my favorite cars.
(CROSSTALK)
(LAUGHTER)
VAN SUSTEREN: Steve, thank you.
MOORE: Thank you, Greta.
VAN SUSTEREN: Is President Obama making a power grab by forcing the resignation of GM's Rick Wagoner? Our next guest says yes. Joining us live is Senator Bob Corker, Republican from Tennessee. Senator, nice to see you. Senator, a power grab?
SEN. BOB CORKER (R), TENNESSEE: Well, here's what's happened. You know, the administration's been slow on the uptake.
VAN SUSTEREN: The last one or the current one?
CORKER: No, this administration. They got rolling late. The plans were submitted on February the 17th, and they were dead on arrival. They were not aggressive. And they've waited around. There were no real negotiations taking place, and they're getting ready to have a nothingburger press conference today, so they fired Rick Wagoner this weekend to make it look as if they were taking action. And then in the process, they've taken over the company. So yes, I think that very much is a power grab. And I'll tell you what alarms me...
VAN SUSTEREN: But why would they (INAUDIBLE) want this? I mean, like -- I mean, like -- I might want to grab a company if I thought, you know, there was, like, real hope and it'd make me look good. But I mean, if they've already had $17.4 billion, and at least as far as we know, there's no sign it's improving -- they come up with a so-called restructuring plan that's a real dog, it's so bad that the president, to show he has some muscle, has to throw out the CEO -- you've got all these contracts that are incredibly expensive that you can't live with for this company -- I mean, why would you want it?
CORKER: Well, I think they feel like that they can direct the company and cause it to do things, like the kind of cars that it makes, the plants that it's located in. They basically have said that they can do this better than the private sector can.
Now, you know, if this section 363 bankruptcy provision that they're pursuing is so good, easily, on the 17th, they could have told the General Motors board and management that their plan was not good enough and they were going to force them into bankruptcy, and they could have been pursuing one of these prearranged bankruptcies, so...
VAN SUSTEREN: Well, except that the Bush administration could have done that when they -- when the three CEOs sort of zoomed in on their -- on their private jets and sent them back to come up with another program. I mean, it hasn't been, like the GMs have -- I mean, these companies have a huge history of coming in with these restructuring programs. It seems like we come in, we threaten them, we send them home and tell them to come back.
CORKER: Well, there were actually loan covenants that were put into the lending facility that went to this company, and to Chrysler. And basically, it said, You will do these things or you will file bankruptcy on March the 31st. it's just like a lender who makes a loan to you about a home or a business. And so those covenants were put in, but no action was taken. And again, this task force...
VAN SUSTEREN: Why not?
CORKER: I don't know. Again, a plan was presented on the 17th of February. Anyone looking through it could quickly tell, especially with the falling sales that have taken place in automotive -- and as Steve mentioned, it's been a very tough year for the automotive industry. But anyone looking at that could tell that those cuts were not enough to save the company. And again, I think the administration at that point should have said, Look, I'm sorry. These plans are not going to make it. You're not meeting the covenants that we laid out, and you need to prepare for what's called a prearranged bankruptcy. Instead, this administration has taken over the company. Most of the board is gone. They have fired the CEO, and now...
VAN SUSTEREN: Senator, what...
CORKER: ... this is owned by the administration.
VAN SUSTEREN: Senator, what could possibly be the motive, though? Because, you know, look, I don't think anyone wants the auto industry to fail. Everyone wants it to be successful. There are over 140,000 employees that are directly employed by at least these two companies, or some phenomenal number. The bankruptcy system we have in this country has worked for decades. They're experts on restructuring. The White House -- I mean, they may be experts in handling other things, but this is not their strength. So why not today, when the plan didn't come, call the loans, put them into bankruptcy and let everything be renegotiated? Why sort of coddle this? Because we can't afford to spend more money like this!
CORKER: Again, I think their thinking is if they can move into a bankruptcy that's one that's pre-arranged, it'll be less painful. But again, that could have been done by the GM board. The GM board could have decided who the CEO was...
VAN SUSTEREN: It could have been done last fall!
CORKER: Could have been done a long time ago. So yes, I do hope -- you know, this administration now owns this, and as you saw in the Fiat bill, they're actually telling Fiat what types of cars that they're going to build here in this country, which smacks right in the face of industrial policy in this country. So I do hope that they get it right for all those workers that are employed, that do go to work, that are not part of the group you were talking about that doesn't -- doesn't even show up.
VAN SUSTEREN: I think everybody wants to save the auto industry and we should do everything we can, but we just shouldn't be stupid about it and try -- at least -- you know -- well, whatever. Anyway, Senator, thanks very much.
CORKER: Thank you.
VAN SUSTEREN: Thank you.
CORKER: Absolutely.
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