Why Not Bank CEOs?

The Associated Press reports that "General Motors Corp. Chairman and CEO Rick Wagoner will step down immediately at the request of the White House, U.S. administration officials said Sunday." I'm not sure that's a good or bad thing, but I am curious about why the White House would make such a bold demand of a car company the federal government is lending to, but not a similar demand of the banks the federal government partially owns?

What I mean is - how is it that the White House is requesting the resignation of GM's CEO while not doing the same of, say, Bank of America's CEO? In fact, not only is the president not demanding the resignation of bank CEOs, he's actually hosting them for photo ops at the White House. Sure, I know some bank CEOs resigned a few months ago under shareholder pressure, but the Obama administration has never publicly demanded such resignations of the current management that is making the problems worse, nor the resignation of management at the biggest firms (Goldman Sachs, BofA, etc.) that are still in place.

This is what I meant when I wrote in my column last week about a "government of men, not of laws." It just doesn't seem like there's "equal protection under the law" - that is, it doesn't sem like the same standards are being enforced from the White House onto different parts of the economy. In this case, it looks like a real double standard, especially when you consider the White House wants to give away more cash to banks, but may refuse to lend more money to GM and Chrysler.

So here's the question: Can anyone explain the differing treatment of auto companies and Wall Street firms? Is it just that there are far more Wall Street worshipers like Tim Geithner and Larry Summers in the Obama administration than auto industry representatives? Or is it something else?

I'm genuinely asking this question, and not in a way aimed at defending Rick Wagoner. I just want to know what possible public explanation there could be as to why the White House would push auto company CEOs around while coddling banking CEOs?

Comments

[bannorhill]

Why not Senate & House CEO's?

[Peddler]

David: I'm sure that you have heard of the "double edge sword;"------it cuts both ways-----however if properly controlled-----it can cut in a way that the fenceman desires------that's why we have double standards-­-----isn't it?

[Viper]

First Wallstreet execs are gone:

The heads of AIG, Fannie and Fredie were replaced.

The head of lehmans, bears sterns and Merril our gone because unlike GM or Chrysler their companies were not balied out ( and agree with saving detroit, you dont save a major economy, if its w/o an auto industry) The head of Citi was replaced early on by its own Board. The heads and execs of the 30 nationalized banks are gone.

Not all of Wallstreet wanted or needed the money... but were ask to take it.. in order to increase the money supply that was gutted by devalued assets and a falling stock market.

What has been unfair is that money going to Detroit has been givin much more stringently and workers wages have been on the blocks.. but not on Wallstreet ( although there has also been hundreds of thousands in layoffs).

Regards.

[Hastings1066]

Well let me see - there could be a couple of different reasons. One could be "a smoke screen" Take the eye off the ball. Focus it on the left hand so that you don't see what the right hand is doing. I think the President is good at that. What else happened while Mr. Wagoner was resigning? The President signed the Land Preservation Bill - 200 million acres of land, and the Reeves Paralysis Act thing that was attached to it - what was that all about - does anybody know - did anybody pay attention??

I haven't had time to check it out - I'm still trying to figure out how the GIVE act affects my grandchildren and if it's going to be OK to plant a garden in my back yard. There's so much change going on I can't keep up with anything. Is that the intent of this Administration?

The other possibility is that Car Companies aren't as lucrative as the Banking Industry. They don't contribute to campaigns to the extent that the financial institutions do, for example. I wonder how many politicians have invested in Hedge Funds in the past. Just a thought.

I wonder often how people that go into politics often start out as regular Joes and leave as millionaires. I know they get paid decent money, but.........

[studioh!]

Seems like a double standard to me, but what I find truly appalling is the outrageous "salaries" being paid to movie "stars" and over-hyped sports "stars". Greed and overcompensation have run amok, and the president has a legitimate opportunity to ask those types to dial it down as well, to set examples to impressionable youth.

[ProgressiveVoice]

On the contrary! Actors and athletes actually effect the bottom line - that's why the good ones get paid so much. Industry insiders can tell you almost to the dollar the revenue difference between a movie starring Julia Roberts vs the same movie staring an unknown or lesser known actress. Athletes are more difficult to distinguish in dollar terms because they usually play on a team but who can question that a Michael Jordan or Shaq on a team brings more people to the game.

What is appalling is a business culture that deems certain positions less valuable than others because they don't produce revenue - like corporate staff, yet pay huge sums to CEOs and other upper management. A company like Wal-Mart can get by for a long time with no CEO, but let's see how well they do without minimum wage, no benefit store associates.

[flatus]

It has been said many times by many 'pundits' that practically no one understands these financial derivates that have kicked us in the nuts. It is assumed then that we must keep those in-the-know aboard to help fix the problem. It's as if we are on a desert island with a dozen people and a doctor that is fond of rape. The other people are forced to grin and bear having the doctor around because he may save their life one day.

That and a strong desire by the many corporate dole taking representatives and senators to see unions eliminated.

And last there's the incestous, buddy-buddy system made up of the Fed, SEC, and Wall Street. "See you tonight at the club, Biff!"

[mtdon]

derivitives were made to be not understandable because then the theft would go unnoticed until it is too late....

in fact the entire derivitive market was a ponzi scheme -

AND it is still NOT regulated.

Obama is no FDR that's for sure!

[GreenEyedGuru]

The reason is that they actually want to change the way the car companies work, while they prefer to let the status quo remain in the banking industry.

[blulight]

I agree in that there are many key players who want the status quo to remain in the financial world but I dont believe Obama is one of them. Basically as Naomi Klein revealed a few months ago Gheitner was chosen to appease the Wall Street crowd as they wanted someone they were familiar with and will fight hard to maintain the status quo. Basically the big bad apple financial muckety mucks are extorting Obama with the threat of tanking the market if they are not appeased to a certain degree. If the market collapses to any degree those guys might lose some money but more importantly they will maintain control of the market as it is now and thats their number one goal. A collapsed market is a major domino that can tank any recovery for a long long long long time from what I understand. Firing these muckety mucks wholesale and taking enough of them out of power is probably worse than hiring a Robert Reich Sect. of the Treasury instead Timmy Two Shoes the financial tap dancer from NYC. Bottom line Obama is being extorted by the financial wolves as he desperately tries to fix the bloody mess he inherited.

[BlackJAC]

If I had to legitimately guess, it would most likely be because banks can be fixed relatively quickly with some relatively simple policy rewrites, while car companies have to literally go to the drawing board and not merely redesign but build new cars, and that requires far more time.

[cyrano1]

Agree! And the car companes suffer from their well earned reputation for putting out generally poor products. As you say, time is the enemy for rescuing the auto industry.

In addition, the banks need immediate support which would otherwise destroy all of the 401K's/IRA/s out there, creating yet more foreclosures and bankruptcies, and accelerating the downward spiral - thus an immediate bailout with CEO's intact.

After stabilization, reform will presumably follow, and possibly a few heads will then roll.

[fkk501]

I don't like GM cars - they ripped me off on my first purchase when the car rusted after a year.

But this is truly double standards and Americans are basically fair minded people.

If I were Wagoner, I would file for bankruptcy. Let all the jobs go and see whether it is 1 million or 3 million that would face foreclosures on their houses.

After all, if the current government wants to support financial gambling instead of inadequate engineering and manufacturing, they have that right since they have been duly elected by the people and are accountable to them.

Let's see what the reaction would be then.

[RDixon]

Rick Wagoner will be doing a happy dance all the way to the "bank" with a 20 million dollar check in his pocket.

Bank CEOs will watch with envy.

Meanwhile, back in the real world, the downward spiral of the global economy continues unabated and unstoppable.

Closing the gate after the horse gets away is bad.

Closing the gate after the horse is gone and 75% of the fence is destroyed?

[GoodNews]

David, perhaps like the auto execs, the administration sent the bankers back to come up with a plan. Now that they see what happened to Waggoner, I'm betting they (bankers) are sitting up straigther in their chairs.

[Json]

I doubt it. They are probably falling off their chairs laughing. They get 10 times the money the automakers want and they get it with no strings, while the automakers and autoworkers are getting the shaft. The bankers could probably pay for the auto bailout with their bonuses!

[Hastings1066]

You've got that right.

[kentuck]

Obama said he would listen to all sides before he made a decision. He would put Republicans in his Cabinet. However, it seems the only person he is listening to Geithner? He needs more opinions about this crisis than just Tim Geithner.

[bajamary]

President Obama will never "ask" a financial CEO to step down because of his Trinity of Non-resaon:

1. Larry Summers, former de-regulator Sec. of Cliinton's Treasury.

2. Tim Geithenr, former chief of Fed. Reserve NY who watch as Rome/Wall Street burned.

3. Rahm Emanuel, former director of Freddie Mac, who never saw a thing coming but took over $300,000 in "salary"..

[BMBTHC]

I'm guessing that the reason bankers are safe is because they have convinced the govt. that they are the economy, rather than just part of our capitalist system. Look at the people Obama hired to deal with this problem... all Wall Streeters, as if that is the only economic engine in the country. Large companies in and of themselves are the problem. In the name of expediency, government only deals with them, thinking that they will have the most influence that way, but the reality is that the majority of people are not well represented by Citigroup. The majority of people are not represented at all. Are there any union leaders advising Obama? Are there any economic advisors not in the Wall Street cult? We don't hear much about that cabinet of rivals anymore do we?
However, in defense of Obama, I don't see the politics of this situation allowing much creative, constructive action. The people still cling to cold war propaganda and the Republicans are still getting milage out of their incredibly short sighted policies. Maybe it would have been better if Bush could have been given an additional year to really bankrupt the system and flush out the Grahamites and the Hummers and the too-big-to-fail mega-corps.

These financial services companies have been distributing money to politicians from both parties.

[Malkin71]

Here is what happened...

Obama walked into the White House and was greeted by a representative from Goldman Sachs who explained to Obama who really runs the country.

This is the only plausible explanation as the interests of Goldman Sachs have been consistently put ahead of the American people every time.

[nolabels]

The interests of Goldman Sachs ARE your interests. If your business fails, Goldman fails...we all fail. Nobody has an interest in businesses not working (except for a few short sellers and inverse indices holders...not enough to matter). (Of course, I am using Goldman as a proxy for investment banks as I hope you are too)

[Malkin71]

My business can fail and Goldman will never know or care.

Millions of businesses have failed in this country in the time since Goldman got their/our money.

If your point is that we need a working banking system, of course we do.

But we don't need these specific banks. Not when their end goal is sucking as much money from the system as possible to put in the hands of a select few.

If these banks die, new money will start new banks. That is where the free market will actually work.

If GM dies, new smaller car companies will emerge. But the scale of GM (while admittedly TOO bid) will take years of branding, engineering, design, building an infrastructure to supply dealers, etc Our car industry will be Ford and a bunch of Teslas.

[mtdon]

dang nolabels should change his name to apologist for goldman sachs.....