The Perils of Populist Anger: From Rick Wagoner to AIG
$152 billion is the total tally in government loans that insurance giant American International Group (AIG) accumulated over the past eight months and 90% the tax that a congressional bill proposes levying on bonuses for employees whose companies received more than $5 billion in federal bailout money.
328-93 was the final vote on that measure in the House of Representatives last Monday, and December 10th was the date that the bill’s catalyst—the story about continued AIG bonuses—broke. Fifteen is the number of weeks that President Obama allowed populist anger at Wall St. spending to mature before he forced Congress into action, and 15% is the amount his national approval rating dropped over that period.
Rick Wagoner is the name of the former General Motors (GM) CEO who was asked to resign by Mr Obama’s automobile task-force during a meeting last Friday—the same day that Mr Obama met with chief-executives from Bank of America, Wells Fargo, and Morgan Stanley, criticizing them for failing to grasp the financial crisis’ magnitude. That day, March 28th—when Mr Obama decidedly took the reins of Detroit and downtown Manhattan—will mark the president’s shift in policy toward bailed-out American companies from financially interventionist to outwardly managerial.
Populist anger results from any recession, and Mr Obama likely knows that. In the Great Depression such anger was directed at President Hoover and his Treasury Secretary Andrew Mellon; in the post-dot com recession it was directed at Jeffrey Skilling of Enron and John Rigas of Adelphia Communications; now it’s being directed at Bernie Madoff, executives on Wall St. and workers in Detroit. And before March 28th, it was being directed at Mr Obama and the 111th Congress.
Since then Mr Obama and his advisors seem to have had a revelation. In forcing Mr Wagoner from GM and announcing that Chrysler would have only thirty days of funding during which it may negotiate a merger with Italian automobile manufacturer, Fiat, or declare bankruptcy, Mr Obama has recognized that the populists who elected him last year on the platform of change wanted just that—change—and his campaign promises for change amounted to a collective ultimatum: corporate bloodshed or Mr Obama’s presidential approval rating.
Mr Obama chose the approval rating, and Mr Wagoner was that decision’s first casualty. The second ought to be either Chrysler CEO Robert Nardelli—who will likely be out of a job within the month—or AIG chairman Edward Liddy—who has come under fire for his tendency to reward employee loyalty. Thus the ousting of Mr Wagoner can be seen not as a double standard in the president’s treatment of Wall St. and Detroit as some have suggested, but rather as a sympathetic reminder to Americans that Mr Obama is listening and a warning to banking executives that they could be next—that is—that he’s also listening to what’s being said about them. The fact that many are confused by what amounted to Mr Wagoner’s dismissal—that he was never directly accused by the Obama administration of actually mismanaging his company—only makes this warning a more potent one.
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