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GM’s Wagoner to quit as Obama readies decision, sources say

Staff and wire reports

Automotive News | March 29, 2009 – 5:29 pm EST


GM’s Wagoner to quit as Obama readies decision, sources say

DETROIT — General Motors CEO Rick Wagoner is about to resign after eight years as the Obama administration prepares to decide on the automaker’s request for additional government rescue loans, two people familiar with the matter said.

A senior Obama administration official told NBC’s John Yang that Wagoner, 56, was asked to step down by the White House.

The automaker, which has lost about $82 billion since 2004, awaits word Monday from President Obama on a request for as much as $16.6 billion in additional U.S. aid. GM, surviving on $13.4 billion in U.S. loans received so far, has failed to clinch needed concessions from bondholders and the UAW that government officials had set as targets to justify further aid.

Obama said in an interview broadcast today that GM and Chrysler LLC had not done enough yet to become "lean, mean and competitive" under federal oversight.

Obama, who appeared in a taped interview on the CBS-TV news program "Face the Nation," said the automakers had more work to do to reduce costs in the face of slumping demand.

"We think we can have a successful U.S. auto industry. But it’s got to be one that’s realistically designed to weather this storm and to emerge … much more lean, mean and competitive than it currently is," Obama said.

"That’s going to mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody’s going to have to come to the table and say it’s important for us to take serious restructuring steps now in order to preserve a brighter future down the road," he said.

Obama added: "They’re not there yet."

Immediate departure?

The Associated Press said Wagoner will leave immediately. The story was first reported by Bloomberg News.

Wagoner came under fire for his stewardship of GM late last year when U.S. lawmakers debated a bailout for the automaker. He had repeatedly said that he intended to stay on, and GM’s board has offered unanimous support for him.

A GM spokesman declined comment.

Obama last week cited mismanagement "over the last several years" in the auto industry, a point that hit Wagoner hardest since his counterparts at Chrysler and Ford Motor Co. are new to the business and their companies. Chrysler has received $4 billion in U.S. loans and seeks $5 billion more; Ford says it won’t need help unless industry sales weaken further.

GM has been in talks with its bondholders to reduce by two-thirds the roughly $27 billion in debt that they hold. GM and advisers to its bondholders have exchanged proposals on a debt restructuring, but have made little progress toward a deal.

After GM reported a $15.5 billion loss in the second quarter of last year, the automaker’s leading outside director, George Fisher, made a rare public expression of confidence and said that the board still believed Wagoner and his management team were "the right guys" to lead GM.

GM shares have fallen almost 95 percent since 2000, when Wagoner took over as CEO.

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