Reporting from Washington — President Obama said Monday that the U.S. government had no interest in taking an ownership stake in General Motors Corp. But faced with two other bad options -- letting the legendary automaker fail or simply extending more government loans that would add to the company's strangling debt burden -- he had no choice.
"Piling an irresponsibly large debt on top of the new GM would mean simply repeating the mistakes of the past," Obama said. "So we are acting as reluctant shareholders because that is the only way to help GM succeed."
Obama admitted his decision to pump an additional $30.1 billion in taxpayer money into GM and to take a 60% ownership stake "may give some Americans pause." But Obama and top administration officials said the move was a necessary evil. And they vowed to keep that evil in check.
Steve Rattner, head of Obama's auto task force, said the group was not involved in GM's major restructuring decisions, such as which plants to close. And he vowed it would not get directly involved in GM's operations when the new company emerges from bankruptcy. The administration has described the government's new role as "passive investors."
Rattner, a former Wall Street private equity investor, said the task force used that sector's model in assessing GM's situation in an arduous 60-day process.
"We have worked with them on their restructuring plans, . . . but we have not designed them," he said. "We don't feel that we are the ones in any industry, including cars, who should be making decisions . . . normally and appropriately left to management."
But Obama's decision to take the unprecedented step of assuming ownership of a major manufacturing company opened him up to sharp criticism that he was nationalizing the automaker. The Republican National Committee quickly dubbed the company "Government Motors."
"No matter how much the president spins GM's bankruptcy as good for the economy, it is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign," Republican National Committee Chairman Michael Steele said.
The U.S. Chamber of Commerce also said it was concerned about Obama's move, promising to "expose and fight any counterproductive influence by government, unions or politicians over decisions that should be left to management."
