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 Quagmire! - White House Press Briefing by Robert Gibbs 6/1/09 — Tuesday, June 02, 2009 —  Q Thank you, Robert. Leader Boehner said the administration has got to release an exit strategy for General Motors. Does the President have an exit strategy? And I know he described these principles that he's going to follow during restructuring, but is there a timeline for Washington to get out of Detroit for good?MR. GIBBS: Well, Phil, as you know, the President has made a series of difficult decisions that lead us to the point where we are now. And as he has said on many occasions, he doesn't desire to hold a significant share of, or run on a day-to-day basis, an auto company. But he does believe that the investment that we're making -- structured in what is in the best interests of taxpayers, and it -- we'll get out of this equity as quickly as possible in order to protect the investment that taxpayers have made. I don't know that there's a specific timeline. But, Phil, let me broaden a little bit, because -- and I did this a little on Friday, but you basically have several different pathways here. On one side you have a bankruptcy that largely would have resulted in a liquidation -- probably 60,000, 70,000 direct jobs lost, not including suppliers or things like that -- obviously would have had a dramatic economic devastation in the Midwest region and throughout the country. I think another side of this was simply to continue pouring money into a company that you knew wasn't acting in any viable way. The President decided on a different path that I think made some real concessions in restructuring the company. You'll have a company after about a 60- or 90-day bankruptcy that will emerge without a balance sheet loaded down with debt; a restructured company that the task force and the President believe can be profitable in a scenario that sells far fewer cars than what it would take to break even at this point. So the President is certainly anxious to get out of this business, but at the same time he made a series of tough decisions to stave off something that I think would have been far more economically devastating. Q But there is no exit strategy? MR. GIBBS: Well, no, no, no -- I don't -- Q Do you want to -- MR. GIBBS: Well, maybe I should -- I can start all over again. There is an exit strategy -- it's to get this company viable; it's to get the economy strengthened so that GM is producing cars that people want to buy; that Americans have the income to buy those cars; to do so in a restructured way that allows them to be profitable more quickly; and then in order to protect the investment that taxpayers have made, we get out of any involvement in the company -- that's the exit plan. Yes, ma'am. Q Robert, I wanted to zero in on the President's pledge to be hands-off when it comes to the day-to-day management of the company. And you said the same thing from the podium, but a lot of people are very skeptical that Washington will really be able to resist the temptation to be hands-off. There's a lot of decisions that will come up that are politically sensitive, on Capitol Hill and elsewhere, such as which plants are going to close -- those types of things. MR. GIBBS: Well, a lot of those decisions are being made right now. Those decisions are being made by the companies. The dealership structure -- those are decisions that are being made by the companies. Q But down the road there may be other decisions that have to be made -- dealerships and plants and things like that -- MR. GIBBS: Let me interrupt you for a second. I don't think many people ever thought that we could get to this point of restructuring, in all honesty. I think if you take a look at what was set up by some in Congress in November and December when the very first discussions were going on about bridge loans to cover the operating costs for fixed period of time while GM made some restructuring -- I think if you look at some of the standards that were laid out, the Auto Task Force has far exceeded what anybody thought was possible in restructuring. This is a company that will emerge from bankruptcy in 60 to 90 days with no debt, whereas people were saying, well, it would be nice to have -- if we could get to some place that reduced the debt by maybe half. You've got a company that has, I think, a real chance to emerge viable based on some of the tough decisions that have been required. And I think a lot of those decisions have been made without politics in mind. Q But if lawmakers decide they do want to interfere with decisions such as the mix of vehicles and things like that, you can't prevent them from passing a law. What are the safeguards? MR. GIBBS: I think you're now into a little bit of a different question. What if Congress acts to -- Q No, the question is about interference and meddling the day-to-day operations. MR. GIBBS: But let me make sure that I understand your question. Are you talking about if Congress does that or -- Q If Congress does that, as well as if Congress asks you to do it. MR. GIBBS: Well, look, I think it would be unhelpful to get into a hypothetical on what we would do based on a bill that Congress might pass asking us to do something. I think that's a few too many leaps for me to go into. I can simply say that we will work on core governance issues. I think one of the ways to get to a viable company as quickly as possible is working on a board of directors, and a serious and stable management structure that moves this company quickly through bankruptcy and quickly to viability. I think those are the type of core issues that are important as we protect the investment of taxpayers while at the same time, as the President has said, as the task force has said, and lastly as I have said, not involved in the meddling decisions on a day-to-day basis. That's never been and isn't our desire. Q Just to probe a little further on the White House, on the administration's -- how much you're going to be involved in the day-to-day operations of the company -- if General Motors wants to manufacture a car that your Auto Task Force -- whether it's Rattner, Deese, or whoever -- thinks is not going to be a car that's going to sell very well, are you going to stop General Motors from manufacturing that car? MR. GIBBS: Jake, we don't make those determinations. Those aren't -- Brian Deese isn't picking out Chevy Malibu's colors for next year. Q I'm not talking about the color for next year. You said that the point is -- that the exit strategy to make the company about viable for the GM is making cars that people want to buy. So are you going to be involved in -- MR. GIBBS: No, we will be involved in corporate governance decisions such as setting up a board of directors that is going to make those business decisions based on how to get the company the profitability. That's what each company -- that's what the board of directors and the CEOs and the managers and the workers of every company we want to be involved in is a viable, strong, profitable company. Look, now, I don't want to confuse this, so obviously Congress and the executive branch are involved in -- have always been involved in some decisions. And again, I'm not -- I don't want to co-mingle these issues, but I am separating to some degree -- two years ago, Congress set fuel mileage standards that go through model 2016, okay. Those have been established. I've seen reports that said, well, you know, we may -- the Auto Task Force may decide that it's time to build these tiny little cars that go 40 miles an hour, blah, blah, blah. Congress has always exercised its purview to set, for instance, corporate average fuel economy standards. That's, I know, not what you're talking about, but I am sort of separating some of those issues so that we're not in the midst of confusing them. Q Right. I guess my point is, Fritz Henderson said today that the standard is going to be that they're going to try to build, for their new lines of cars and trucks, ones that are outstanding that people want to buy -- which came as a surprise to me that this was some new idea for an auto manufacturer, the idea that they would try to come up with something that consumers actually would like to purchase. What reason do you have for confidence that United Automakers, the people who have been running these companies, are going to be able to come up with something that Americans are going to want to buy, and therefore, this $30 billion to $50 billion investment is going to pay off? MR. GIBBS: Well, look, I think you have seen over the course of several years an auto industry that has seen, regardless of economic conditions, a fairly dramatic decrease in its auto sales, not the least of which is because some of -- you know, you've seen the reports -- Q Yes, and they kept on making Hummers and they kept on making junky cars that nobody wanted to buy. MR. GIBBS: Well, I think part of the restructuring ultimately is that the Auto Task Force forced some decisions that I think in many ways some of these companies had been putting off for years. The auto companies have dropped brands. We've all seen that -- whereas some people -- different companies are marketing only a few different models and using a fixed number of advertising dollars to push them, whereas some of the American auto companies have had 10 or 12 different models. You've seen different companies that have the same car -- literally the same car under different names and several different manufacturers, which hasn’t made a lot of sense. Obviously I think, again, one of the things that's been done is there is a fundamental -- Q You're proving my point. You're proving my point. It's not like Fritz Henderson just walked in from another company. I mean, what makes you think that this investment is going to pay off? Just because they've learned a lesson now? MR. GIBBS: I think in many ways their previous business model had been very locked in. I think you've all seen the reports today of the serious amount of debt that GM was carrying, right? When you're losing that kind of money, it's hard to undergo some fundamental restructuring without making some very fundamental decisions. I think it's pretty clear that the companies have, in many instances, decided that they've got to produce different cars; some of those are coming on in later model years. There are things like the Chevy Volt that I think people believe, based on the high price of gas, based on consciousness about our dependence on foreign oil, can create different markets. But I think that fundamentally what has happened is a company is free now to make fundamentally different decisions. Yes, sir. Q Robert, have you defined the criteria for the board of directors? MR. GIBBS: Not that I know of, but I can check on that. I don't know if there's been a strict delineation. Q But, I mean, sort of overriding principles for these people, because they will key. MR. GIBBS: Well, look, I think you want a group of people that have been very successful in the businesses that they've run; that have some experience in running companies and understand what it means to undergo fundamental restructuring; to operate in a whole different world. Again, if you look at -- I used this analogy last week -- you're going to have to make fundamental different decisions. Thirty years ago this was a company that employed probably 10 times the number of workers that it does right now. Obviously, there's a mind-set change that has to go on, and I think that's what they'll look for in a board of directors. Q Do you think they have to come from the auto industry, per se? MR. GIBBS: Well, no I don't. I don't think that's necessary, no. I think that having people that understand how to run a good business means running a good business regardless of what you're doing. Auto Task Force | Automobile Industry | Congress | General Motors | Press Briefing | Robert Gibbs | White House Press Corps Labels: Auto Task Force, Automobile Industry, Congress, General Motors, Press Briefing, Robert Gibbs, White House Press Corps >> Full Story
Posted by White House Press Corps @ 2:46:00 PM 
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