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Today the US automakers will head to Capitol Hill to seek a bailout because they say they've been ambushed by tough times. But some things seem out of whack.

USA Today, quoting writers from the Detroit Free Press headlines "Chrysler leaders get millions" and says:

"As Detroit's crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs."

CEO Richard Wagoner of GM will make over $14 million this year according to Reuters. When he became CEO of GM in 2000, the stock was trading around $65. Today it's around $3. Mr. Wagoner has not indicated that he will either step down or take a pay cut if GM is bailed out

In the meantime, the Free Press reports that "Honda is planning to hold an official dedication ceremony Monday at a new Civic plant in Greensburg, Ind."

So the US auto companies need help to pay, among other things, executive bonuses that are more than many municipal budgets. At the same, they're laying off people, supposedly to save money. And while they're being ambushed by the economy, Honda is opening a new plan in Indiana.

The auto industry request for aid deserves careful consideration. The auto companies employ hundreds of thousands of people. More people work at dealerships and suppliers all over the country. Thousands more receive retirement funds from the automakers.

Whatever happens to the automakers will have an impact on those lives. But rushing in with a quick fix would be a mistake. We've gotten it wrong before.

Just last week the New York Times reported that "The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers."

We need to get it right. There are people who need help. But we need to be sure that they're actually going to get it. We need to be sure that any bailout plan won't reward arrogance or incompetence. We need to be sure that any bailout plan will make future bailouts unnecessary.

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  • 11/17/2008 11:56 PM Steve Roesler wrote:
    Way to go, Wally.

    After 25 years of "Leadership" books, seminars, and MBA courses, we are finally seeing what has really been happening when it comes to personal accountability for one's "leadership."

    This unfolding drama--or soap opera--magnifies an absence of character, ethics, and personal responsibility at a magnitude unseen in my lifetime. Most troubling is that the titans of business are headed to Washington, D.C. to ask for money from elected "leaders" who are more than willing to reward mismanagement using the money earned by responsible citizens.

    Film at 11. . .
    Reply to this
    1. 11/18/2008 7:10 AM Wally Bock wrote:

      Two things disturb me greatly, Steve. One is the disconnect between many of the people at the top and the reality outside the executive suite. I wonder what Wagoner's bonus is for if most of the performance measures are on a long term downtrend. The other is the disconnect between the people in congress and the reality outside Capitol Hill. We don't even pass real legislation any more, just bills that are the vehicle for earmarks and our representative seem to represent themselves and their party more than the people who elected them.


      Reply to this
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