By GottaLaff
Sure, Rick Wagoner deserved his fate. He did too little too late to save an iconic American institution from devolving into a government charity case. [...] Yet few disputed the judgment of the Michigan governor, Jennifer Granholm, that Wagoner was a “sacrificial lamb,” a symbolic concession to public rage ordered by a president who had to look tough after being blindsided by the A.I.G. bonuses. Detroit’s chief executive had to be beheaded so that the masters of the universe at the top of Wall Street’s bailed-out behemoths might survive.
On this point even the left and the right could agree. The union leader Andy Stern publicly wondered why the administration didn’t also dethrone Ken Lewis of Bank of America. Thaddeus McCotter, a conservative Republican congressman from suburban Detroit, asked, “When will the Wall Street C.E.O.’s receiving TARP funds summon the honor to resign? Will this White House ever bother to raise the issue?” [...]
But even as that unanswered question hangs in the air, a more revealing inquiry might be this: Why is there any sympathy whatsoever for a Detroit C.E.O. who helped wreck his company, ruined investors and cost thousands of hard-working underlings their jobs, when there is no mercy for those who did the same on Wall Street? Might we, too, have a double standard? Could we still be in denial of the reality that greed and irresponsibility were not an exclusive Wall Street franchise during our national bender? [...]
At least Wagoner, unlike the sultans of finance, created cars, clunkers though they often were. [...]
But this romantic view of the auto industry is a sentimental illusion. Some of Wall Street’s exact failings also capsized G.M.: the hard sell of alluring but junky products, crony capitalism, reckless gambling, unregulated accounting sleights of hand. Only if we accept the full extent to which the bubble virus spread beyond that New York City town can we grasp the radical treatment President Obama must administer to restore the nation to health.
The parallels between G.M. and the likes of Citigroup are uncanny. Much as bloated financial institutions gorged on mortgage-backed derivatives even when the underlying fundamentals made no rational sense, so G.M. doubled down on sure-to-be obsolete S.U.V.’s and trucks to serve a market transitorily enthralled by them. Much as the housing boom’s collapse left the get-rich-quick holders of AAA-rated mortgage derivatives with worthless paper, so the oil price spike left consumers trapped with self-indulgent, wealth-depleting gas guzzlers. In both instances, the customers were not entirely innocent. [...]
G.M. further emulated Wall Street by creatively finessing its balance sheets, moving its health care liabilities for retirees off its books (into a trust) to cosmetically enhance its appearance of fiscal health. It’s no surprise that members of G.M.’s often-compliant board — also now slated for overhaul by the White House — served as well on boards at Morgan Stanley, Goldman Sachs and SunTrust Banks (another recipient of a multibillion-dollar government bailout).
Perhaps the most illuminating Detroit/Wall Street parallel of all is GMAC, the G.M. financial affiliate whose phantom profits were used to help hedge the parent company’s losses when its share of the car market plummeted. GMAC was yet another outfit that placed risky bets on the housing bubble until it burst, taking G.M.’s bottom line down with it. [...]
Nice as it might be to believe that Wagoner was done in only by his unreconstructed retro faith in antiquated cars and his lethargic management of the various G.M. restructurings, he was part of this larger financial culture. And like bailed-out Wall Street executives, he walked away with a sizable reward for his failure: $23 million. [...]
Those on Wall Street who took the money and ran are beyond the reach of the guillotine. [...]
But facts matter little when set against the public anger at corporate America in general and banks in particular. The latest ABC News/Washington Post poll found that 80 percent of the country blames banks for the financial crisis — a percentage even larger than that blaming George W. Bush (70 percent). To be less popular than our departed president is a Herculean feat heretofore achieved only by Dick Cheney.
The cheering news in this poll is that Barack Obama remains hugely popular, with a 66 percent approval rating that has surely gone up since, boosted last week by his and Michelle Obama’s beguiling representation of America abroad. It doesn’t hurt that the president’s political opponents back home are laughable. [...]
The only group more out of touch remains bailed-out Wall Streeters. [...]
As we hope Obama learned from his narrow escape from the A.I.G. bonus firestorm, it’s imperative he stays clear of these conflagrations. Timothy Geithner’s latest bank-rescue plan has not remotely addressed fears that the fix is in for the same well-connected banking crowd that created the mess. The plan’s transparency — let alone its effectiveness — will be essential to deflecting those suspicions.
But in the unsatisfying aftermath of Rick Wagoner’s demise, we must rid ourselves of the illusion that there’s a rigid separation between Wall Street and what John Rich calls “the real world.” Any citizen or business that overspent or overborrowed in the bubble subscribed to its reckless culture. That culture has crumbled everywhere now, and a new economic order will have to rise from its ruins.
This is what Obama is talking about when he insists on pushing for change simultaneously on so many fronts — green jobs, health care, education, new financial regulation, infrastructure spending and all the rest. [...] [T]he most important question is not whether he will try to do too much at once but whether he will and can do enough. Change is hard. Change is traumatic. Sending a juicy C.E.O. — or six — to the gallows is at most a crowd-pleasing opening act to the heavy lifting of reform and rebuilding we still await.
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