Obama Favors Bankruptcy

The tacit dismissal of GM CEO Rick Wagoner today by President Obama was a scary moment given its ramifications for a precedent setting government intervention in the private sector. But in the end Wagoner had to go–his whole staff should probably go. And its because the company should have been bankrupt a while ago, and the company taken a new direction.

It looks like President Obama has realized this, as WSJ is reporting the Administration has bankruptcy for GM and Chrysler at the top of its options for how to manage the auto industry.

On one level, if the government is going to use taxpayer money to save GM, at the very least their leadership should change. We’ve been saying that for a while. The key question becomes: will the President stick a hand chosen successor in the GM CEO spot, or will he let the stock holders and board choose the next leader. Its a test for how much government control of the private sector there will be.