Even critics say firing GM CEO is a bad idea

updated 5:27 p.m. ET Dec. 8, 2008

DETROIT - General Motors Corp. Chairman and CEO Rick Wagoner may have to sacrifice his job for the cash-desperate automaker to get government loans, but industry analysts, a GM board member and even one of the company's harshest critics say now isn't the time to let him go.

As a deal for enough money to keep GM and Chrysler afloat through March emerged in Washington, Senate Banking Committee Chairman Chris Dodd, D-Conn., said on CBS' "Face the Nation" that Wagoner should leave as a condition of GM getting the loans. President-elect Barack Obama, without naming names, said the current auto industry management should be ousted if it doesn't understand the need to make changes.

GM board member Kent Kresa said GM's board met by telephone Monday, but he would not say whether Wagoner's future was discussed.

Other chief executives have been ousted as part of the government's financial industry bailout. American International Group Inc. replaced its chairman and CEO in September after the Federal Reserve took a controlling stake in the troubled New York-based insurer, and the CEOs of mortgage loan giants Fannie Mae and Freddie Mac were forced out.

Kresa, chairman emeritus of Northrop Grumman Corp., said in an interview with The Associated Press that he does not think Congress will require Wagoner's departure, and it would be a terrible move because Wagoner has made great progress restructuring the automaker. But if the board has to choose between vital government money and Wagoner, it will have to consider his ouster, he said.

"If it is contingent on any particular element, whether there's an oversight board, whether the full board needs to go, whether Rick needs to go, whether we have to move from Detroit to Washington, D.C., we need this resource in order to keep this great company going, and we're going to have to look at whatever the demands are from the individual who's bringing the money," Kresa said. "But I don't think it's reasonable."

Even University of Maryland economist Peter Morici, a vocal auto industry critic, questions the timing.

"I advocated Wagoner going a couple of years ago," Morici said Monday. "But at this critical time, it's the wrong time to change helmsmen."

Morici, who testified against the auto industry bailout before Dodd's committee last month, said the boards of GM, Ford Motor Co. and Chrysler LLC should pick who runs their companies, not Congress.

"It's better just to make them show how they can be profitable before giving them the cash," Morici said.

Kevin Tynan, an analyst with Argus Research in New York who also has been critical of GM management, also said the timing is not right to oust Wagoner, who has agreed to work for a $1 salary next year.

"Who are you going to bring in now?" Tynan asked. "You're not even going to get anybody as good as him who is as familiar with the situation, who has dealt with the union, dealt with the dealers. You need someone in there who has dealt with all these groups."

Detroit-based GM is seeking up to $18 billion in loans to help it get through the recession and the worst U.S. auto sales downturn in 26 years, while Chrysler wants $7 billion. Ford has said it could need $9 billion if the sales slump continues, but it has enough cash to make it through 2009 and might not need any help.

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