Posts for Tag: bailout

Finally... the government gets it!

When asked whether he left open the option to pressure a bank CEO to resign, Geithner responded, "Of course. Of course.

On the heels of Rick Wagoner's ouster, Tim Geithner made this statement in an interview with CBS.  Though not as adamant as I would prefer, it still sends a message to executives of companies who are receiving government assistance.  If they couldn't run a good business while playing with their own money, what makes us think they are going to do any better when the money isn't their own?

I assume this is a misprint...

Sprint's CEO awarded $2.6 billion bonus

I assume that's a typo and it's $2.6 MILLION and not BILLION.  Even still, I don't really have an issue with any CEO's pay as long as the company doesn't get government assistance.  If Sprint can absorb whatever losses they've had AND pay him a bonus, that's their prerogative.  My rule of thumb is that any company that receives a bailout needs to have their executive ranks whacked because if those executive were doing a good job, they would never have needed a bailout to begin with.

UPDATE: CNET has fixed the typo.

A quick solution to the Bonus Scandal at AIG

The news regarding $165 million in bonuses paid to AIG executives has been making the rounds. A lot of people are trying to come up with solutions on how to get back some or all of that money. There's a lot of legal back and forth about whether it's even possible or that doing so would hurt AIG by having "good" executives leave (are there not a lot of "good" executives currently out of work that couldn't fill their spots?). Since I'm a solutions oriented guy, I have a suggestion that might solve everyone's issues. Just reduce the next bailout payment by $165 million. Believe me, $165 million may sound like a lot but compare that to the billions we've given AIG so far, it's really not that big of a deal. More than anything, it's a public relations issue and not an operations issue. So to soothe the public's concern, just deduct the bonus amount from the next payment and call it a wash. It'll be a lot easier than lawsuits and grand standing but maybe to all the politicians the publicity was all they cared about.

UPDATE: More craziness has insued.  From a special surtax to executives allegedly being asked to commit ritual suicide.  Again, in my opinion, it's an opportunity for certain politicians to cash in publicity-wise on the outrage by the taxpayers.  However, towards the end of the article, there is mention that the Treasury would try to restructure the next bailout payment to recoup the bonus amount.  That's probably the most frictionless way to do it.

Interesting opinion on the auto industry ... good intent, bad execution

Techcrunch has a guest post from Todd Dagres of Spark Capital. In it, he suggests that President Obama should get Steve Jobs to run a joint government bailed-out GM-Chrysler. Though I agree with the overall strategy of the article (firing the current auto execs and streamlining the product line), I don't think Steve Jobs is the best person to actually execute this. His other choices (should Steve not be available), John Chambers or Craig Barrett are somewhat more plausible, though not quite there.

It's a little simplistic to think that Steve can make everything he touches into gold. Though Steve has had great success at Apple and Pixar, the shear size of the auto companies dwarf even those two industry leaders. I think Steve could be a great product strategist for the auto industry, but I think it'll take someone with big industrial operational experience to execute on a new product vision. Maybe it's a tag team effort - Steve leading product development and someone like say, Jack Welch to run operations? I know Nardelli was a GE alum but I don't have much confidence in his ability to lead given his lackluster results at both Home Depot and Chrysler.  Perhaps the master can do better than the student.

I don't agree with GM and Chrysler

News came out today that GM and Chrysler seek an additional $22 billion in aid from the government. That's in addition to the $17.4 billion already committed. I just can't see throwing good money at a poorly run business. It's one thing to bail out banks because credit markets affect a lot of people. However, bailing out an automaker that continually makes poor decisions and even poorer cars is crazy. As a condition of any bailout money, I would request that all the CEOs and upper management be fired. I applaud what Ford has done in not requesting bailout money. Of the three US auto manufacturers, I'd most likely buy a car from them. Isn't it telling that the car maker that churns out the better products is the one that least needs help?