In retrospect, GM CEO Rick Wagoner’s demise was perhaps the most inevitable twist in the autos overhaul saga to date. The chance that he would present a radical plan to Obama this week, one dramatic enough to save his job, was slim at best. A more shocking result, one clearly less viable for Obama, would have been to make a few more threatening noises and hand out the cash that the company so desperately needs without demanding a very public pound of flesh – a head, in this case.
With only another 60 days to effect a U-turn in defiance of a skidding market, former GM COO Fritz Henderson doesn’t have a lot of room to maneuver. It’s hardly enough time for Washington to have installed a new crash-test chief executive.
The Chrysler bailout story is more intriguing. The private-equity owned car maker has been given 30 days to do a deal with Fiat, which has in deal talks to date pledged somewhere around zero in financial support. If that price was too much for the Italian auto maker, they may think that the ticking of the clock could give them some leverage to squeeze a few billion out of either Chrysler’s private-equity owners or U.S. taxpayers.
While Fiat managers may feel like kids in a Hot Wheels factory, they should probably temper their enthusiasm. Giving a foreign car maker U.S. taxpayer dollars would probably be politically poisonous to Obama, leaving bankruptcy a more viable option for the private-equity venture.
Deals of the Day:
* Turkey’s Sabanci family is buying a 15.3 percent in German airline Air Berlin, scooping up part of Len Blavatnik’s stake, more than two months after the U.S. billionaire sold the holding.