General Motors Can Redeem Itself

Today the United States and the world witnessed one of the biggest bankruptcies of our time by a company that was supposed to be impermeable. General Motors has been around a hundred and one years, but today it could no longer sustain itself without going the route of Chapter 11. Rest assured, this is not the end of GM, it isn't like the Oldsmobile brand that has completely disappeared. The company has already spent money on a great PR extravaganza that promises a reinvention.

They say as much to the press:

"The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many," GM Chairman Kent Kresa said in a written statement. "Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world."

As it reorganizes, the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

"Our agreement with the U.S. Treasury and the governments of Canada and Ontario will create a leaner, quicker more customer and completely product-focused company, one that's more cost competitive and has a competitive balance sheet," CEO Fritz Henderson said at a news conference in New York. "This new GM will be built from the strongest parts of our business, including our best brands and products."

Of course, it didn't have to come to this. GM could have shed their arrogance decades ago to keep up with other car companies around the world. Yet they only cared about the bottom line and quick short term profits that ultimately led them to the the Chapter 11 filing that they so deserved. Now they'll have to lay off more than 21,000 workers on top of the thousands already gone and in the deal with the government, shrink the size of the company. Obama said that'll he'll let the day to day stuff be handled by GM but that might not be the best way to go. Instead, listen to someone that has filmed, covered and lived the life that GM bestowed upon Michigan. Make the company do the things that our country and world need, not just to let the executives claim to make changes on a spiffy commercial and through press releases. That change can happen now, and at this monumental (and bankrupt) time it should come quicker than ever.

Lehman Execs Tried To Give Themselves Huge Payout Just Before Ship Sank

In an emergency you always know the way out of a building because all the rats are headed in the direction of the exit. That scenario is no different from that of the Lehman Bros. bankruptcy where top executives wrote themselves huge checks just before the S.S. Lehman sank into the sea of greed. If I were on a sinking ship, I'd want a nice life raft with supplies to last for at least a few days. At Lehman's, they went a step beyond and the five guys at the top tried to gold-plate their raft with more than $100 million dollars.

From The Times of London:

THE Lehman Brothers board signed off on more than $100m (£59m) in payouts to five top executives just three days before the bank went bankrupt leaving thousands of employees out of work in London.

The payoffs, approved on September 12 by the Wall Street giant’s compensation committee, included over $24m in severance packages to the collapsed firm’s top three London executives.[...]

The committee also signed a $41m retention package for Eric Felder, the head of global fixed income in New York, and a $40m two-year deal for Jerry Donini, the US-based head of equities. These are understood to have been voided, replaced by new contracts under Barclays which bought the US business.

The pay deals will further inflame the debate raging about executive pay as the global financial crisis accelerates.

In the two years prior to Lehman’s collapse, the executives were generously remunerated while overseeing forays into risky commercial real-estate investments that helped to bring the company down.

It truly is amazing that this type of behavior isn't criminal. People go to jail for stealing (or attempting to steal) far less than the amount these crooks had hoped to take. More than that, they had already been showered with riches from their risky ventures while they went boom before the inevitable bust. If these executives had any sense of humility or knew what it means to be accountable, they'd have given back the ridiculous amount of money they already had, not take any more.