LA Times, Dobbs uncritically forward McCain's false claim that Wagoner's departure was "unprecedented"

LA Times, Dobbs uncritically forward McCain's false claim that Wagoner's departure was "unprecedented"

››› ››› DIANNA PARKER

The L.A. Times and Lou Dobbs uncritically repeated Sen. John McCain's false claim that the government's decision to ask for Rick Wagoner's resignation is "unprecedented." In fact, similar actions occurred at AIG, Fannie Mae, and Freddie Mac in September 2008.

In a March 31 article, the Los Angeles Times uncritically quoted Sen. John McCain saying of Rick Wagoner's resignation as General Motors CEO: "This is a remarkable move by the federal government -- I think unprecedented in the history of this country. ... What does this signal send to other corporations and financial institutions about whether the federal government will fire them as well?" Similarly, on the March 30 edition of CNN's Lou Dobbs Tonight, host Lou Dobbs stated that "[s]everal leading Republicans immediately criticized the president's plan and blasted his decision to fire GM's CEO Rick Wagoner. Senator John McCain said Wagoner's dismissal is a remarkable and unprecedented act." In fact, the government did not fire Wagoner as Dobbs claimed. Rather, the government told GM that Wagoner had to step down as a condition of GM receiving further government aid. Moreover, contrary to the characterization of the government's action as "unprecedented," similar actions occurred at AIG and at Fannie Mae and Freddie Mac, where chief executives were removed in September 2008 as part of agreements to accept government aid.

As Media Matters for America has noted, in announcing his resignation, Wagoner stated, "On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have." Indeed, The New York Times reported on March 30, "The White House on Sunday pushed out the chairman of General motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid" [emphasis added].

Moreover, contrary to McCain's claim that the decision to ask for Wagoner's resignation as a condition for further government aid was "unprecedented," since September, several executives have been asked to resign as a condition for receiving government aid:

  • In a September 7, 2008, jointly released statement, then-Treasury Secretary Henry Paulson and then-Federal Housing Finance Agency director Jim Lockhart announced that as part of the government's decision to take Fannie and Freddie into conservatorship, "New CEOs supported by new non-executive Chairmen have taken over management of the enterprises."
  • A September 17, 2008, Washington Post article reported of the Bush administration's decision to bail out AIG, "The terms of the rescue package allow the government to replace [chief executive Robert] Willumstad, and a source familiar with the matter said last night that Willumstad would be succeded [sic] by Edward Liddy, former chief executive of Allstate." On September 17, 2008, the Associated Press likewise reported Willumstad's removal as a part of the bailout deal.

From the March 30 edition of CNN's Lou Dobbs Tonight:

DOBBS: Chrysler reacting quickly to the president's demand for action on forming an alliance with Fiat. Chrysler today said it has reached agreement on what it called a framework for a partnership with Fiat. No details were given, however.

President Obama gave Chrysler 30 days to complete work on such an alliance with Fiat or face losing as much as $6 billion in additional money from the federal government.

Several leading Republicans immediately criticized the president's plan and blasted his decision to fire GM's CEO Rick Wagoner. Senator John McCain said Wagoner's dismissal is a remarkable and unprecedented act.

Another leading Republican, Senator Bob Corker [TN], said, quote, "Firing Rick Wagoner is a side show to distract us from the fact that the administration has no progress to announce today." Senator Corker added, "With sweeping new power, the White House will be deciding which plants will survive and which won't, so, in essence, this administration has decided they know better than our courts and our free-market process how to deal with these companies."

From the Los Angeles Times article by reporter Jim Puzzanghera:

In a message to GM employees Monday, Wagoner said he agreed to the administration's request Friday to step aside and called his replacement as CEO, longtime GM executive Fritz Henderson, "an excellent choice."

"GM is a great company with a storied history. Ignore the doubters, because I know it is also a company with a great future," Wagoner told them.

Obama said the decision was "not meant as a condemnation" of Wagoner, but was done because the company needs a "new vision and new direction."

Some Republicans, however, were alarmed at the decision to oust the head of a private company, even one that has received government bailout money. GM and its financing arm have received a total of about $19.3 billion. Chrysler and its financing arm have received about $5.5 billion.

"This is a remarkable move by the federal government -- I think unprecedented in the history of this country," said Sen. John McCain (R-Ariz.). "What does this signal send to other corporations and financial institutions about whether the federal government will fire them as well?"

Posted In
Economy
Network/Outlet
CNN, Los Angeles Times
Person
Lou Dobbs
Show/Publication
Lou Dobbs Tonight
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