The Cat and the Rat
June 18, 2009
Though I try to steer away from politics in general (not that I don’t have a thought or two), when former AT&T Chairman & CEO monopolist Ed Whitacre’s name pops up as the next Chairman of GM, I have to say something.
This whole car thing…Ed’s appointment, including the Car Czar Rattner, is getting more and more bizarre.
Let’s start with America first, a habit I have of doing. We have an unenjoyment (unemployment) rate over 9%. Amongst the 9% of people not working in America, who want to work, we can’t find anyone else for these positions except Whitacre and Rattner.
Ed Whitacre was not nominated by the GM Management Committee. Ed Whitacre is not being voted upon by the shareholders. Ed Whitacre was appointed Chairman post-BK (chosen) by the Treasury Department! The same Treasury Department headed up by a guy named Geitner, an ex-Goldman Sachs hash slinger. The same Geitner socializing, I mean nationalizing, our banks to “save” them. Think TARP with strings attached and changing the rules, stress tests and other gimmicks.
President Obama just appointed his 16th Czar who is accountable to no one. This is the Salary Czar.
Wouldn’t you think that a Salary Czar might be against hiring Whitacre on? After all, Mr. Whitacre is living off of a $158 million AT&T pension … just like most other AT&T retirees.
Sure I know, he and other government-picked–I mean, independent–Board Directors will work for a dollar a year until things get better at GM. However, Ed Whitacre openly admits he knows nothing about the auto industry and has no experience manufacturing anything. So, at a dollar a year, I guess you get what you pay for. Even unenjoyment pays more than a dollar a year.
(Please don’t tell me how a Chairman is focused on strategy because you would be wrong — a Chairman’s primary duty, I think it is called a Fiduciary Duty, is to make sure all shareholder interests are represented at the table … emphasis on the word “all.” Many companies have separated the Chairman’s role from the CEO’s role for this exact reason – CEO focuses on strategy and execution; Chairman focuses on shareholder interests.)
Are we sure there is no other choice in the 9% unemployed that could use this job? A $158 million pension package … how does Ed get by? Really sorry to see a guy leave retirement to make ends meet. But social security being the mess it is in, can you blame him?
Now the Car Czar, Steve Rattner. Stevie has a reported net worth of at least $188 million, some say over $600 million. He is also building a small $18 million cottage on Martha’s Vineyard. Like our buddy Ed, I just don’t know how he makes ends meet.
In his role as Car Czar he is not accountable to anyone in terms of our Constitution–not even Ed. But if recent history is any indication of the future – if Ed and the Car Czar disagree — bye-bye Eddie!
Our Car Czar does have some history in the auto industry. In the recent past he invested into Cerberus Holdings. Yes– the Cerberus Holdings that took Chrysler private. Yes–the Chrysler with TARP money, who is now owned by Fiat; and well, let’s say Cerberus did not do quite well in the deal. Steven also owns $1000.00 in Ford Motor Company stock in a family trust. Seems qualified to me.
But Rattner’s specialty is really deal making and knowing how to invest in really good things! Yet another Real Smart Guy from Wall Street at the helm! I am not quite sure but Stevie may have been involved in some of those credit default swap things that are way too sophisticated for people like you and I to understand. I wonder how Stevie made out with his packaged paper?
Ed and Stevie probably crossed paths years ago. As Ed was putting Humpty-Dumpty (Ma Bell, aka: the ILECs) back together again by acquisitions which the government turned a blind-eye upon, I am fairly confident an investment banking firm that Mr. Rattner was with may have been involved in a few of those transactions … for a fee of course and independent judgment.
My point: we should all feel good that Ed and Stevie share common history – the formation of a team nucleus for the new GM.
What about GM in all this? Let’s see… Senior secured bondholders were trashed (forget about contracts and that pesky Constitution). Junior, unsecured debt became senior when converted into shares. We have a monopolist as Chairman while the government under its Car Czar owns 62% of the new GM.
I really don’t see a happy ending to this story. Do you?
Written by Dave Rusin - Telecom Executive
Posted by admin | Filed Under Dave's Corner, Telecom Blogs, Telecom bloggers, Telecommunications bloggers, Telecommunications blogs
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