04/30/2009 05:12 am ET | Updated May 25, 2011

GM CEO Wagoner Forced Out... Now What?

Often it's hard to understand the logic behind some of these politically motivated moves.

While I don't fully disagree with the need for a shakeup of the U.S. car makers, I'm not sure if replacing the CEO of GM (who was actually making reasonable progress) with his own hand-picked COO is much of a shakeup. It seems to me that we were building up too much heat regarding the AIG situation, and decided to take our anger out on GM.

Incidentally, I'm interested to know how badly we have now damaged Chrysler's ability to get an equitable deal done with Fiat. Can you imagine entering negotiations with Fiat while they know that your main financial backer has publicly announced that 1) your business no longer is viable, and 2) they will only offer support if you get a deal done with Fiat... Talk about having close to zero leverage.

I, for one, am very concerned that the steps we are taking to shore up the current economic problems are simply too politically motivated, and don't set up the reorganized companies in the best manner to succeed. We hire and fire executives based on public opinion vs. what is truly good for the companies and can drive their ultimate success. We give the executives of these companies the task of fixing monumental problems, but when they earn a contractual bonus we demonize them.

We need to have the courage to make the right decision on its own merits. Find the best people to run these companies, and don't expect them to be public servants. Rather, pay them market rate and more, so they are lured away from their current high-paying jobs at companies that are doing well, even in this tough environment.

The worst thing we can do is invest billions in these troubled businesses but be stingy when it comes to hiring and paying the skilled individuals who are badly needed to wisely invest taxpayer money and turn these organizations around.

Cross-posted at