The Obama administration is wading into the auto industry in an amazingly big way. All this time, we've been wondering whether the U.S. government will nationalize banks, and whether the stakes it has taken in banks will result in regulators ordering bank bosses to stay or go or change course.
Set that aside for a moment. The auto industry's hometown paper, the Detroit Free Press, runs today's news this way: "U.S. Shreds Auto Plans." Key bit:
President Barack Obama will give General Motors Corp. 60 days to craft a new survival plan without Chairman and Chief Executive Rick Wagoner, and set a 30-day deadline for Chrysler LLC to either partner with Fiat SpA or shut down.
Already in for some $17 billion in loans to the automakers, the federal government is now setting fairly exact conditions for more help. From the Detoit paper:
Obama told Michigan lawmakers Sunday night that both companies had failed to meet the terms of their loans and weren't viable today. While Obama said GM could be viable by itself, the administration asked Wagoner to step aside as a condition of aid, which Wagoner agreed to do Sunday, ending a 31-year career with GM.
The Wall Street Journal says calling for Wagoner's head and giving Chrysler strategic instructions marks "one of the most dramatic government interventions in private industry since the economic crisis began last year."
Or as Andrew Sullivan writes, "I get the heebie-jeebies any time a politician makes a business decision."