President Obama said on Monday that the U.S. government has no interest in running General Motors although tax-payers will own a majority of the strugling company after it emerges from bankruptcy.
The federal government plans to invest another $30 billion in GM, which filed for Chapter 11 bankruptcy reorganization earlier on Monday, pushing the governments stake in the firm to 60 percent .
The intervention marks the third time the government stepped in the prevent the collapse of the auto maker. Last December then-CEO Rick Wagoner asked Congress and received. The company returned again in March to get more cash.
This may give some Americans pause, the president acknowledged , but it was a better alternative than making more loans to a company that has been buried under a mountain of debt for years.
The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions, Obama said. When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision.
In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly, he said.
The U.S. Chamber of Commerce hopes that will be the case, but it plans to “carefully monitor” the decisions made by GM and Chrysler, which is emerging from its own government-guided bankruptcy reorganization.
“We will expose and fight any counterproductive influence by government, unions or politicians over decisions that should be left to management,” chamber president and chief executive officer Tom Donohue said. “And we will continually insist that government reduce and eliminate its ownership stake as soon as possible.”
Too much government interference will hurt the automaker’s chances of returning to profitability, Donohue said.
“The global talent that exists in the automotive sector must be allowed to do its job and be paid on a competitive basis,” he said. “Management must be permitted to make tough decisions in a competitive global market without political interference.”
House Minority Leader John Boehner, a Republican from Ohio, said GM’s bankruptcy filing may buy some time, but it doesn’t ensure the company will succeed.
“The only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars,” Boehner said. “Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic vitality? It’s time for the administration to fully explain what the exit strategy is to get the U.S. government out of the board room once and for all.