By on November 18, 2009

I zee, hear, and know nozzink. Picture courtesy collegerecruiter.com

The Senior Counselor to the U.S. President for Manufacturing Policy; and Leader on the U.S. Presidential Task Force on the Auto Industry, Ron Bloom, was utterly clueless.  He told Reuters that the Obama administration supposedly was just as flabbergasted by GM’s sudden reversal on the Opel deal as Angela Merkel and the rest of Germany was. That they supposedly were not consulted. And that this is just divvy, because it “underscores the independence of a new board put in place to safeguard the U.S. government’s investment in GM.” Isn’t Teflon wonderful?

Bloom was “completely surprised. Our anticipation was that it was going to be approved. But the board of directors is an independent board of men and women who take their own decision. They made their own decision and we’re not going to try to get them to change it. I guess we could have said something. We absolutely did not.”

Bloom admitted that the timing of the GM decision was politically “awkward.” It happened while Angela Merkel was in town. Nobody of the administration told her – now we know why: The Administration was oblivious. Left in the dark by an independent board that acted on its own.

“Our friends in Germany were upset and we were most assuredly not glad they were upset,” Bloom said. “We value this relationship hugely. We would not sneak up on you with this ever. But we got snuck up on with this. And that’s what happens when you have an independent board that makes up their own mind.”

“In a perfect world, I would have known about it in advance. But you can’t know about it in advance because it’s a decision that happens in the board room. So by definition, I couldn’t know.”

Bloom said that the independent GM board has received clearance to invest the company’s cash in overseas operations if the board thinks that the money would make the automaker a stronger global player. Your tax dollars at work.

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18 Comments on “Bloom: Obama Administration Blindsided By Independent GM Board...”


  • avatar
    guyincognito

    Well, I’m glad to hear about the independently, independent, independence of the GM board!

  • avatar
    FloorIt

    So nothing has changed since Steve Rattner’ comment in Fortune.

    “Everyone knew Detroit’s reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.”

    • 0 avatar
      Steven02

      I am not sure how this particular comment is relevant to this decision.  GM actually turned around a made a different decision rather quickly.  In the long run, this will make GM a better player in the European market.

    • 0 avatar
      John Horner

      How does the new GM board’s decision to scuttle an Opel deal (which was initiated by prior management) somehow an indication of being “insular and slow-moving”?

    • 0 avatar
      Mark out West

      Versus the titanically stupid decision making processes that necessitated TARP in the first place.  “Let write naked derivatives and swaps – the market will NEVER go down!”

      Wall Street, and Rattner, make GM look like Cisco.

      As to the BOD, they’re the legal decision makers.  If you don’t like what they do, dump them at the next shareholder’s meeting.  Until then, enjoy the ride.

  • avatar
    Ken Elias

    Frankly, GM’s Board did make the right decision.  If the gov’t of Germany was going to finance Magna, why not finance GM?  Not that Opel will ever be a “winner” but at least GM gets to keep its technology and not share it with Magna and its Russian partners so they can’t get a start and compete with…guess who…Chevrolet in Eastern Europe.
     

  • avatar
    Steven02

    I would actually say this is good news.  It goes to show you that the gov’t isn’t running GM.  As poorly as GM was run before, only our gov’t, republican or democrat, could run it worse.

  • avatar
    John Horner

    You can’t please all the people all the time. Germany will find it hard to believe that, in general, the US government is not intimately involved with private industry even when the government has an ownership stake.
    If the board wasn’t making independent decisions based on its view of what is best for the company then we would have complaints of a government run enterprise not conforming to business realities. However, if the board is making independent decisions then we are told that the government must be a bunch of inept administrators who aren’t looking after things in the kitchen. No matter what, some vocal group is going to be angry.
    What was the German government doing inserting itself so forcefully in the question of who would buy Opel assuming GM did cut it loose?
     

  • avatar
    Daanii2

    So the Obama administration has no problem firing Rick Wagoner when GM was owned by other people. But now that GM is owned by the United States government, GM’s board can do whatever it wants to do.

    Makes a lot of sense. Not.

    • 0 avatar
      Steven02

      I am not sure anyone mentioned Wagoner, but if you want to make a strawman’s argument, go for it.
       
      GM didn’t have to accept the deal that Wagoner resign.  It was simply a condition of taking more money from the gov’t.  Since the gov’t wants GM to function on its own, it is letting the reigns go.

  • avatar
    wmba

    @ John Horner:

    “Germany will find it hard to believe that, in general, the US government is not intimately involved with private industry even when the government has an ownership stake.”

    This is a somewhat pompous statement. Why would Germany find this proposition difficult? Do you think Germany interferes with Mercedes or BMW, which are private “public” stock companies. What Germany finds difficult is that when the US Government owns 60% of a company, making said company hardly private by any reasonable definition of the word “private”, they don’t have a clue what’s going on. Ron Bloom is glossing over his responsibilty in this matter. Did anyone find his similar meanderings on Chrysler and the “maybe” GM IPO uplifting? Pathetic, I call it.

    “What was the German government doing inserting itself so forcefully in the question of who would buy Opel assuming GM did cut it loose?

    Bertel’s answered this question in great detail over the months. For some summaries visit Reuters. There was no doubt that GM was going to sell Opel, they were bankrupt. Did they want to sell Opel? No. But they didn’t really want to go through Chapter 11 either. There was no assumption involved — GM was going to sell Opel. Had to. Germany provided life support.

    None of this means that Germany was correct in picking Magna. But thumping one’s chest about the great US way of running a nationalized company, and then ascribing conspiratorial nastiness to Germany hardly gets to the root of the problem, IMO. Especially as I for one just don’t get your point. So far, the US running of a nationalized company has been shown to be as inept as Farago knew it would be.

    I want my money back. All the strutting peacocks of national pride are hardly likely to pay me back 5 cents.

    • 0 avatar
      Steven02

      Why would Germany think that was the position?  How many times did Obama say he isn’t interested in running a car company?  The point was help keep GM going, not to run it and oversee everything.  Whether you agree or disagree that it should have been done in the first place is irrelevant to the discussion.  It has been done and this is the way it is operating.  The US gov’t shouldn’t be running it and doesn’t plan to.  If they were going to try to, it may as well been chap 7 for GM because the gov’t can’t run a business.
      And you are right, GM was going to sell Opel.  It didn’t want to, but it had to.  And remember, this pending sale has been going on since when? November 2008.  Offers were put in on July 20, 2009.  In August, Germany says if you pick Magna, we will give loans.  But not for RHJ, which GM wanted to sell to.  If Germany would have allowed the loans to RHJ, then the sale probably goes through, and goes through quicker.  Forcing Magna wasn’t the right move for Germany, and it bit them.
      It is funny that you mention that the running of the nationalized company has been shown to be as inept as Farago knew it would be.  Especially, when the post right before this said, A) people would complaining about too much gov’t involvement, B) the gov’t would be inept.  Looks like you chose B.
      For the record, if you only read the ttac spin on anti GM propaganda, I would understand why you might think that.  It isn’t like GM can fix all its problem in 6 months or a year.  It can improve, and that it has done.  Is it perfect, not by a long shot.  And it will take to for it to get better.

  • avatar
    wmba

    “Bloom said that the independent GM board has received clearance to invest the company’s cash in overseas operations if the board thinks that the money would make the automaker a stronger global player. Your tax dollars at work.”

    But Bertel, they don’t need Ron’s clearance. They’re in charge of themselves, so he says.

    What a farce.

  • avatar
    Pig_Iron

    Poor Schultz, all he wanted to do was go back to his family and the Schatzi Toy Company.

  • avatar
    jznzfs

    Actually, this is the most refreshing news I have seen on GM in years….perhaps, over a decade!  At last, a board of directors that is something other than a gathering of eunichs.  I don’t think I’m quite ready to jump on an IPO but this is good.  Of equally good news is the departure of Al de Molina from GMAC.  I was somewhat wary of Carpenter’s previous associations but the fact he wants to move GMAC away from mortgage operations and focus on automotive is great….how’s he going to do it?

  • avatar
    tparkit

    Couple of points:

    – there was no GM "decision" to hang on to Opel. The deal fell through because there wasn’t enough public money on the table to induce the partners to take this turkey off GM’s hands. A deal will go ahead if the Obama administration (a) coughs up the difference and, probably, (b) agrees to stay involved (through a continuing GM equity stake) so that the joint venture can keep a cash pipeline hooked into the US taxpayer artery.

    – Bloom’s posturing regarding detatchment from GM’s board is part of the administration’s exit strategy from its unpopular nationalization of the auto industry.   As part of this, Washington wants deniability regarding responsibility for the inevitable failures at GM and Chrysler.  When things go wrong, it had damn well better be somebody else’s fault.  That’s why Fiat was given favorable terms to take Chrysler off Washington’s hands. Similarly, the Germans are counting on Washington’s need to cut and run. Team Obama will be forced to subsidize Opel to unload it, allowing the Germans to step back and keep their cash.

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