President Obama promised
that GM would be run by business decisions. Anyone who has watched how government owned companies are run around the world knew that this was an impossible promise. Well, it turns out that was only the beginning
Along with Montana's two Democratic senators, the Republican congressman is battling to get GM to reinstate a contract with a Montana palladium mine nullified in bankruptcy court. "The simple fact is, when GM took federal dollars, they lost some of their autonomy," Mr. Rehberg says.
Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members -- 100 U.S. senators and 435 House members.
Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.
Democratic Sen. Amy Klobuchar of Minnesota persuaded GM to rescind a closure order for a large dealership in Bloomington, Minn. In Tucson, Arizona Democratic Rep. Gabrielle Giffords did the same for Don Mackey, owner of a longstanding Cadillac dealership with 80 employees. Rep. Giffords argues it made sense, even for GM, to keep the Mackey dealership, which sold 750 cars last year. "All I did was to help get GM to focus on his case," she says.
Lawmakers say it's their obligation to guard the government's investments, ensure that bailed-out firms are working in the country's interests and protect their constituents.
Executives say congressional demands gobble up time and make a rocky business environment even more unpredictable. Bank chief executives say incessant calls from Capitol Hill, combined with threats of legislation, were among the main incentives for them to pay back money injected by the government and escape Washington's clutches.
Thomas Geisel, chief executive of New Jersey's Sun Bancorp Inc., says the bank paid back its federal money in June because of legislation that imposed limits on bankers' pay, among other areas. "Lawmakers let emotion and ego get in the way of making good business decisions," he says. . . .
Labels: bailout, GM, governmentcontrol