New GM Chief's ties to the Chicago Machine
Crony capitalism played on a scale never before seen.
It turns out that new Government Motors CEO Edward Whitacre has some interesting ties to the Chicago political machine as well as the White House.
Jim McTague writing at Barrons Online has the lowdown:
DON'T BE HARD ON GM'S NEW CHAIRMAN EDWARD WHITACRE for confessing during an interview last week that he knows nothing about cars. He simply suffered a Joe Biden moment. Texans often tumble over their tongues when taking a stab at humility. In fact, few car companies, let alone their CEOs, know how to build cars, which is why so many of them are conking out. The Obama administration, in my view, picked Whitacre to run General Motors (ticker: GM) because he has a more important talent: He knows how to play Chicago-style politics.
Whitacre predominantly donates money to GOP causes, but he is no party purist. While serving as chairman and chief executive of SBC, the regional Bell that grew under his leadership into AT&T, Whitacre helped a couple of influential Chicago Democrats -- both friends of President Barack Obama -- enrich themselves between political gigs. He gave former commerce secretary Bill Daley a very sweet job and White House Chief of Staff Rahm Emanuel a very sweet investment-banking opportunity.
I have written about the Emanuel deal before ("Unraveling Rahm Emanuel's Fast Fortunes," Dec. 22, 2008). In short, SBC picked up a residential security outfit in acquiring telecom Ameritech and was ordered in 2000 by the Federal Communications Commission to divest itself of the property. Ameritech had sunk $1.4 billion into the subsidiary -- SecurityLink -- and SBC thought it could sell it for about that much.
Instead, according to the story, SBC ended up selling the company in 2001 to an investment group represented by Emanuel for $479 million. Six months later, the group sold it to Tyco for a cool $1 billion.
Rahmbo ended up with his biggest payday outside of politics - a $16 million windfall courtesy of his ties to the machine.
None of this surprises us, of course. But one wonders if there was anyone else out there - someone who might have known a thing or two about the automobile industry - who might do a better job than the Obama yes man who has apparently been placed in charge of GM.