Fritz opens himself to criticism on public blog

[deftonesfan867]

http://www.edmunds.com/insideline/do/News/articleId=149649

DETROIT — General Motors President and CEO Fritz Henderson, who promised the buying public that he would be available to them when the company filed for bankruptcy on Monday, is finding himself the target of venomous attacks on the GM FastLane blog.

In a Tuesday posting titled "Keeping the Conversation Open," Henderson opened himself up to such vitriolic comments as: "Mr. Fritz, The issue is your company is selling snake oil...At least admit you screwed up big." That posting came from John Shultz, who identified himself as "the American working Joe."

"Mr. Henderson, I have been a loyal GM owner until June 1, 2009," wrote J.E. "I will no longer purchase a GM car because owners of the 566 million shares of GM stock and the holders of 27B of bonds have been completely written off by you, the CEO and the U.S. government — e.g. President Obama. Why would ANYONE invest in the new company? You just zeroed out the existing investors. Because of this, I will not buy a new Cadillac CTS this year, but I will buy either a Lincoln or luxury transplant car but here in the USA."

Henderson responded to that comment by saying: "We recognize our actions have a significant impact on many constituents, including stockholders, bondholders, employees, dealers, retirees and others."

Robert Hammen, a disgruntled owner of a 2009 Pontiac G8 GT, told Henderson: "No economical RWD sedans = no more new GM purchases for me (sorry, a starting-at-$37K [Cadillac] CTS isn't in my price range)."

In an intriguing response that seemed to hint at future-product possibilities, Henderson responded: "Robert, I appreciate your comment. Certainly the G8 is going to be one of the Pontiacs we'll miss. But we haven't closed the door on RWD now or in the future. As we map out our future vehicle needs, if we can find the right opportunity and price point to do a world-class RWD car, you can bet we'll consider it."

Inside Line says: Sounds like Fritz Henderson may need a flak jacket if he plans to continue down the "transparency" path. — Anita Lienert, Correspondent

Edited June 3, 2009 by deftonesfan867

[Drew Dowdell]

"I will no longer purchase a GM car because owners of the 566 million shares of GM stock and the holders of 27B of bonds have been completely written off by you, the CEO and the U.S. government — e.g. President Obama. Why would ANYONE invest in the new company? You just zeroed out the existing investors.

Idiotic. It's just another way to stab at Obama.

Do you boycott K-Mart? Delta Airlines? U.S. Airways (twice)? United Airlines? Northwest Airlines? Most major malls?

[deftonesfan867]

The person probably doesn't even drive a domestic car I'm willing to bet.

[BuddyP]

Idiotic. It's just another way to stab at Obama.

Do you boycott K-Mart? Delta Airlines? U.S. Airways (twice)? United Airlines? Northwest Airlines? Most major malls?

Obama still owns those airlines?

While I am not that extreme, I do understand the guys frusterations.

[Drew Dowdell]

Obama still owns those airlines?

While I am not that extreme, I do understand the guys frusterations.

Obama owns GM? This guys frustrations fail to understand the purpose of the bankruptcy. Be consistent. If you're going to be mad at GM for declaring bankruptcy, you HAVE to be mad at those other companies I listed. The only reason the government is even involved in this process is to provide the financing to get GM through the BK period since no private company can do it right now. US Airways had a government loan to get them through the bankruptcy period. They refinanced that loan privately after they emerged from bankruptcy. I don't see people running around calling them Government Airways.

We're 3 whole days into this bankruptcy. Give it a chance to work.

[hyperv6]

Idiotic. It's just another way to stab at Obama.

Do you boycott K-Mart? Delta Airlines? U.S. Airways (twice)? United Airlines? Northwest Airlines? Most major malls?

You need to stop being Obama sensitive. He and Fritz are just the top targets for all of this by the people who lost money and jobs. When you are at the top you have to have thick skin.

I can understand the comment on how many will want to invest in a company after giving most of it to the goverment and UAW. I would not buy stock in something like that till it show strenght to stand on its own again.

But on the other hand I have no issue with the bail out. I would rather see the goverment bail out GM and Chrysler vs sending billions to N Korea or spending it on laid off workers welfair when we could have kept them working.

The idea of bailing them out was the right call now how they split the money I could put up to debate. In a free market society it is important to maintain a free market if you want investment. I would have liked seen the investors better covered for their risk and trust.

Either way there are just going to be a lot of hard feeling and a lot of this is going to go around for a while. I know the UAW guys in Mansfield are on the war path with everyone from the prez to the uaw.

Edited June 3, 2009 by hyperv6

[ShadowDog]

Obama owns GM? This guys frustrations fail to understand the purpose of the bankruptcy. Be consistent. If you're going to be mad at GM for declaring bankruptcy, you HAVE to be mad at those other companies I listed. The only reason the government is even involved in this process is to provide the financing to get GM through the BK period since no private company can do it right now. US Airways had a government loan to get them through the bankruptcy period. They refinanced that loan privately after they emerged from bankruptcy. I don't see people running around calling them Government Airways.

We're 3 whole days into this bankruptcy. Give it a chance to work.

The mob mentality with the one-sided viewpoint is tough to debate with. When all is good, nobody notices, or even cares when they do notice; when all is bad, everyone thinks they have the right to voice their uninformed 'opinion'.

[ZL-1]

Without Government intervention GM was headed to liquidation, so... how are shareholders being wiped out of something that was basically worthless? These people talk of GM as it was a perfectly healthy company that was nationalized by a Chavez-like nutcase... I find that amazing...

Edited June 3, 2009 by ZL-1

[CaddyXLR-V]

Well Obama was able to force the CEO of GM to resign. Isn't that usually only a power of an owner?

[Drew Dowdell]

Well Obama was able to force the CEO of GM to resign. Isn't that usually only a power of an owner?

Obama said GM couldn't have the loans with Wagoneer as CEO. GM had a choice. CEO or (relatively) easy money.

No, I don't define that as ownership.

[Robert Hall]

Obama said GM couldn't have the loans with Wagoneer as CEO. GM had a choice. CEO or (relatively) easy money.

No, I don't define that as ownership.

Yes, as a condition of the loan..not that different from a startup company taking venture capital and the VC firm providing their choice of CEO as part of the funding deal (I've been through a few of those).

Edited June 3, 2009 by Cubical-aka-Moltar

[Teh Ricer Civic!]

Well, this whole process could have gone smoother if this just went normal Ch. 11. If no financing was available than a government debtor in possession loan would have been acceptable... should GM make it out of the bankruptcy the existing shareholders are NOT wiped out. If it fails, well GM liquidates and .gov gets the proceeds.

GM CANNOT emerge as strong from this bankruptcy as it could have from a regular bankruptcy.

Edited June 3, 2009 by Teh Ricer Civic!

[CaddyXLR-V]

Obama said GM couldn't have the loans with Wagoneer as CEO. GM had a choice. CEO or (relatively) easy money.

No, I don't define that as ownership.

Ok, well the government will have over 60% ownership in GM. Is that considered ownership?

[hyperv6]

The mob mentality with the one-sided viewpoint is tough to debate with. When all is good, nobody notices, or even cares when they do notice; when all is bad, everyone thinks they have the right to voice their uninformed 'opinion'.

It is not so much mob mentality than just the people who did not benifit from the goverment action. There were winners in this deal and losers. The UAW for the most won due to a lot of donations and the invester who lost out.

I have no issue with the UAW getting a part of the action if anything it will put them at stake. But the investor should have been included somewhere.

No matter what anyone did someone would be pissed.

[Drew Dowdell]

Ok, well the government will have over 60% ownership in GM. Is that considered ownership?

That's called collateral on the loan the same way my mortgage company owned some percentage of my house.

Do you refer to US Airways as Government Airways?

[Drew Dowdell]

It is not so much mob mentality than just the people who did not benifit from the goverment action. There were winners in this deal and losers. The UAW for the most won due to a lot of donations and the invester who lost out.

I have no issue with the UAW getting a part of the action if anything it will put them at stake. But the investor should have been included somewhere.

No matter what anyone did someone would be pissed.

The bondholders wanted liquidation.

[Z-06]

But the investor should have been included somewhere.

The basic 101 of owning shares of a publicly traded firm is that you get dividends for owning its shares at the risk of losing all the capital when the company goes down. If the people fail to understand or do the research about a company's strength then their shares are put at their own risk, not the company's. Just ask Warren Buffet about it - he will just not buy shares if he thinks he is going to lose the capital. Legally GM or ANY publicly traded company is not liable to those investors.

[Drew Dowdell]

How does owning stock in public companies like GM and AIG provide the government the type of ownership over the means of production that is the hallmark of socialism (as Hayek and Von Mises tell us themselves)? Stock ownership does not necessarily yield control; the management still has that. Hence, I don't see how it makes any sense to call this activity socialist in any way.

The Bush and Obama administrations were faced with three basic choices: (1) let these companies fail, (2) help these companies out with no strings attached, or (3) help these companies with strings attached that allow the government to be participate in any downstream upside. While I don't necessarily agree with it (or its execution) in every instance, option 3 certainly seems like the most rational choice given where everything stood. It's also the most business-like approach.

[Camino LS6]

The mob mentality with the one-sided viewpoint is tough to debate with. When all is good, nobody notices, or even cares when they do notice; when all is bad, everyone thinks they have the right to voice their uninformed 'opinion'.

They do, it's called the first amendment.

[CaddyXLR-V]

How does owning stock in public companies like GM and AIG provide the government the type of ownership over the means of production that is the hallmark of socialism (as Hayek and Von Mises tell us themselves)? Stock ownership does not necessarily yield control; the management still has that. Hence, I don't see how it makes any sense to call this activity socialist in any way.

The Bush and Obama administrations were faced with three basic choices: (1) let these companies fail, (2) help these companies out with no strings attached, or (3) help these companies with strings attached that allow the government to be participate in any downstream upside. While I don't necessarily agree with it (or its execution) in every instance, option 3 certainly seems like the most rational choice given where everything stood. It's also the most business-like approach.

One idea, hold all of GM's assets like their plants as collateral, like the lenders did when they loaned Ford money? Look at what the govt did with their ownership stakes in banks, telling them where and how they could spend their money, and they didn't even have majority ownership. Do you need to ask your mortgage lenders permission when you take a trip somewhere? Do you need to ask them what method you can use to travel there? I sure hope not. They have no say as to what goes on in your property, as long as you don't default. Therefore, they do not own the property, they own the lein, in case the loan is defaulted on.

Edited June 3, 2009 by CaddyXLR-V

[hyperv6]

They do, it's called the first amendment.

Shhh! they will go for that one after they take the second.

I understand the risk and all of sock holders. But the UAW also has the risk of getting nothing too. GM could have just shut the doors and said sorry about your luck till the goverment stepped in.

The fact is a lot of people got a cut here that normally would have been shut out. The fact many of the share holders were old people and retired GM employees not represented by anyone for the most part lost out. DO you think the UAW would have gotten much if the Republicans had been in charge here with all the money the UAW gives them?

Right or wrong DC works on pay back for what you payed for with both parties. Lobbiest rules and how much I need your money and vote will gain you favore. A hand full of unreprsented grand fathers and grand mother had little chance here.

While a large amount of money would have done little for the major bond holders it would have at least been something to the small private invester that got nothing but the shaft.

This was a case were either everyone got a piece of the pie or nothing. The goverment and UAW could have done with a little less to cover many more. Everyone should share in the lose equally.

[Drew Dowdell]

One idea, hold all of GM's assets like their plants as collateral, like the lenders did when they loaned Ford money? Look at what the govt did with their ownership stakes in banks, telling them where and how they could spend their money, and they didn't even have majority ownership. Do you need to ask your mortgage lenders permission when you take a trip somewhere? Do you need to ask them what method you can use to travel there? I sure hope not. They have no say as to what goes on in your property, as long as you don't default. Therefore, they do not own the property, they own the lein, in case the loan is defaulted on.

Stocks are much more fluid, can be bought and sold easily, and gives the government an upside for taking the risk. The government DID NOT tell the banks where to spend the money. The Federal Reserve, a private corporation, directed the cash flow.

Many mortgages have clauses regarding maintaining the livability of the house, whether or not you can rent it out while not occupying it, requiring certain levels of insurance, etc. Did you know that the bank can (usually) inspect your home after the first thirty days you are late on your mortgage? If they feel you haven't been taking care of the property, they can begin foreclosure proceedings.

It's rarely enforced, but it's there.

[gm4life]

Well, this whole process could have gone smoother if this just went normal Ch. 11. If no financing was available than a government debtor in possession loan would have been acceptable... should GM make it out of the bankruptcy the existing shareholders are NOT wiped out. If it fails, well GM liquidates and .gov gets the proceeds.

GM CANNOT emerge as strong from this bankruptcy as it could have from a regular bankruptcy.

I couldn't agree more.

[gm4life]

I don't like this, but if GM can become a private non-goverment owned/run company someday (relatively soon) it will be fine with me. All new cars due to the new fuel economy legislation are going to suck anyways. So weather gov't tells them to build it with CAFE or gov't forces them because they own them it will not make a difference. I am to that point. I just hope good can come from this and gov't will give up their 60% ownership of the company, if Obama won't the next republican president will. I am willing to let it all play out. I have been kicked enough lately, no more Pontiac, and now government owning 60% of the comapny and the new fuel economy standards all make me sick. Which is why I say I will wait and see what happens.

Edited June 3, 2009 by gm4life

[BuddyP]

Obama owns GM? This guys frustrations fail to understand the purpose of the bankruptcy. Be consistent. If you're going to be mad at GM for declaring bankruptcy, you HAVE to be mad at those other companies I listed. The only reason the government is even involved in this process is to provide the financing to get GM through the BK period since no private company can do it right now. US Airways had a government loan to get them through the bankruptcy period. They refinanced that loan privately after they emerged from bankruptcy. I don't see people running around calling them Government Airways.

We're 3 whole days into this bankruptcy. Give it a chance to work.

He owns 60% of it. Look, I understand... but there's also a difference in US Airways refinancing that loan privately vs gov't saying "we'll forgive the loans so far" and bypassing all standard bankruptcy laws.

I'll just go back 7 months ago when I said I was against the first bailout loan, and I said to let em go Chapt 11 and get it over with. Well..... 7 months and many billions $$ later, they are going through Chapt 11.

I hope it goes as smooth as it possibly can as well. And while Obbie says that the gov't has no intensions of running a car company, and they keep getting deeper and deeper involved everytime they say that, I hope that all changes for the better as well.

Edited June 4, 2009 by BuddyP

[CaddyXLR-V]

Stocks are much more fluid, can be bought and sold easily, and gives the government an upside for taking the risk. The government DID NOT tell the banks where to spend the money. The Federal Reserve, a private corporation, directed the cash flow.

Many mortgages have clauses regarding maintaining the livability of the house, whether or not you can rent it out while not occupying it, requiring certain levels of insurance, etc. Did you know that the bank can (usually) inspect your home after the first thirty days you are late on your mortgage? If they feel you haven't been taking care of the property, they can begin foreclosure proceedings.

It's rarely enforced, but it's there.

I think you just have a lot more optimism that the government won't use their influence for GM to do things their way than I do. The government DID influence the banks. They did speak publicly against the banks, turning people against them for every little thing. Wells Fargo accepting TARP funds was directly related to wether their takeover of Wachovia would be approved quickly or dragged out. I don't trust everything the government says, because they can go back on their word at any time without consequences. Obama has big goals, and it's not just to fix GM, and the economy.

Edited June 4, 2009 by CaddyXLR-V

[CaddyXLR-V]

And I believe GM wanted to keep Pontiac, but the plan they submitted to the government, was turned down. GM didn't decide Pontiac had to go, the government did.

Edited June 4, 2009 by CaddyXLR-V

[Robert Hall]

And I believe GM wanted to keep Pontiac, but the plan they submitted to the government, was turned down. GM didn't decide Pontiac had to go, the government did.

It was inevitable..GM has been trying to wind down Pontiac for years, mostly through neglect.

[CaddyXLR-V]

It was inevitable..GM has been trying to wind down Pontiac for years, mostly through neglect.

Yes, but they tried to keep it around as a niche brand. The government said no.

[Robert Hall]

Yes, but they tried to keep it around as a niche brand. The government said no.

I think that 'niche brand' was just spin...I doubt if they really intended to keep it that way..the whole integration with Pontiac into Buick and GMC was to make it easier to phase out than they did with Oldsmobile.

[z28luvr01]

It'd have been a much tougher decision had Pontiac not been treated like the redheaded stepchild of GMNA for the past 25 years. While the government's role in Pontiac's death is unclear, it is GM who starved it and left it outside to allow nature to take its course.

Obama is on record as saying he has no interest in running GM. I don't know about you, but I don't think the leader of the free wold has that kind of time. I also read somewhere that the govt's ownership of GM is not intended to be permanent. I can't find the link but I'll post it when I do.

[Drew Dowdell]

In a 9 million vehicle per year market with 19% market share, Pontiac and Saturn don't make sense. Pontiac would have to be so "niche market" they'd end up being Tesla.

Personally, I think Pontiac's fate was sealed with the new Malibu. Once GM proved they could sell a main stream Chevy again that was far superior to the Pontiac sibling, Pontiac was doomed.

If GM feels the need to sell a sporty version, they can make RS or SS models.

[CaddyXLR-V]

It'd have been a much tougher decision had Pontiac not been treated like the redheaded stepchild of GMNA for the past 25 years. While the government's role in Pontiac's death is unclear, it is GM who starved it and left it outside to allow nature to take its course.

Obama is on record as saying he has no interest in running GM. I don't know about you, but I don't think the leader of the free wold has that kind of time. I also read somewhere that the govt's ownership of GM is not intended to be permanent. I can't find the link but I'll post it when I do.

It will probably be 5 years minimum. There is almost 0 % chance the government will get it's money back before then. A lot can happen in 5 years.

[Robert Hall]

It will probably be 5 years minimum. There is almost 0 % chance the government will get it's money back before then. A lot can happen in 5 years.

I predict GM's market share, realistically, will probably be at most 10-15% in 5 years. Can it be profitable at the point? Lots of variables.

Edited June 4, 2009 by Cubical-aka-Moltar

[Drew Dowdell]

I don't care about market share. I care about profitability.

Address the hole in the bow first before you worry about getting under steam again.

[Robert Hall]

I don't care about market share. I care about profitability.

Address the hole in the bow first before you worry about getting under steam again.

Good analogy..I think GM's state currently would be like a ship with a bent propeller, broken rudder, and the whole bottom rusted out, taking on a lot of water, with people bailing water as fast as the can to stay afloat.

Lots of good products right now, but lots of corporate problems..the next few months and next year should be very interesting to see what happens.

Edited June 4, 2009 by Cubical-aka-Moltar

[evok]

I couldn't agree more.

That is because you and Teh Ricer Civic! do not know the first thing you are talking about. Just read Oldsmoboi's posts, he get it.

There are many reasons to be bullish on the New GM.

[gm4life]

That is because you and Teh Ricer Civic! do not know the first thing you are talking about. Just read Oldsmoboi's posts, he get it.

There are many reasons to be bullish on the New GM.

I think evok, Teh Ricer Civic! and I know more than you think, and just happen to disagree with you and Oldmoboi and that is what makes this country great. THE FREEDOM TO DISAGREE. At this point I am going to wait and see how it plays out, because I really want to keep buying GM products (now most likely Chevy's and someday maybe a Caddy). I like my small GM dealer and have had good luck with my GM products. IN THE END, I AM WILLING TO GIVE GM A CHANCE TO WORK THIS OUT.

I have stuck with GM so long because I grew up riding in Pontiac Catalina's and Bonneville's and I always liked my father's taste in vehicles. I feel comfortable in General Motors products and have had good luck overall in the ones I have owned. Another HUGE reason I have stuck with GM besides being comfortable with their products and growing up around them is the dealership 20 miles south of me I actually trust, no they don't have a huge inventory but I trust them to give me a fair shake. They always have, and I feel a loyality to them words cannot explain, they have been good to me and so I want to get cars I can get serviced by them.

Edited June 4, 2009 by gm4life

[gm4life]

Be consistent. If you're going to be mad at GM for declaring bankruptcy, you HAVE to be mad at those other companies I listed.

I am not mad, and the reason is I don't give a damn about those other compaines. I care about General Motors and the domestic car industry, I would prefer to NOT have government run them into the ground or force them into making cars people don't want to buy. Then again that is going to happen either way with CAFE and the fuel economy standards. I am still willing to give GM a chance, and see how this plays out and I do hope you are right about GM going back to private ownership, (and being sucessful again) I just fear they will become a fixture in government for good.

Edited June 4, 2009 by gm4life

[Drew Dowdell]

I would prefer to NOT have government run them into the ground or force them into making cars people don't want to buy.

Again, it is NOT in the government's best interest to do either of these things.

[gm4life]

Again, it is NOT in the government's best interest to do either of these things.

Well good I hope they don't. I really hope you are right about all this...

[evok]

I think evok, Teh Ricer Civic!

doubtful

[Robert Hall]

It is what it is. Whatever will be, will be. We are but pawns in game of life.

[gm4life]

It is what it is. Whatever will be, will be. We are but pawns in game of life.

That is true.

[Teh Ricer Civic!]

That is because you and Teh Ricer Civic! do not know the first thing you are talking about. Just read Oldsmoboi's posts, he get it.

There are many reasons to be bullish on the New GM.

Just wondering Evok, all i proposed was a government DIP financing, it would have allowed them to make the same conditions as they made doing this. The only difference is that it is only equity ownership if the company fails its restructuring.

Provided GM makes it through, i don't even see any difference between whats happening now vs a government DIP; other than in the end .gov doesn't own the company (and later have to incur additional expenses in selling off their vast stake).

It is what it is. Whatever will be, will be. We are but pawns in game of life.

Man what a defeatist attitude. You cannot have that attitude if you want to keep your rights

Edited June 4, 2009 by Teh Ricer Civic!

[Drew Dowdell]

Just wondering Evok, all i proposed was a government DIP financing, it would have allowed them to make the same conditions as they made doing this. The only difference is that it is only equity ownership if the company fails its restructuring.

Provided GM makes it through, i don't even see any difference between whats happening now vs a government DIP; other than in the end .gov doesn't own the company (and later have to incur additional expenses in selling off their vast stake).

Where's the upside for the government then? If anything this method puts MORE pressure on the government to make it work and it's MORE capitalistic than if the government had just thrown them money with no strings.

[Teh Ricer Civic!]

Where's the upside for the government then? If anything this method puts MORE pressure on the government to make it work and it's MORE capitalistic than if the government had just thrown them money with no strings.

No, like any institution doing DIP, the government could demand the entire board be thrown out as a condition of the financing etc.

The only difference is that if GM succeeds through the bankruptcy process then this loan to the government has to be repaid like any other loan. If GM fails then when it goes Ch. 7 liquidation .gov gets all the proceeds as DIP has the highest priority of the creditors.

This would be LESS pressure on the government because if GM fails... well it ain't the governments fault. With .gov owning GM then if GM fails it IS the governments fault because they are the majority owners.

[evok]

Just wondering Evok, all i proposed was a government DIP financing, it would have allowed them to make the same conditions as they made doing this. The only difference is that it is only equity ownership if the company fails its restructuring.

Provided GM makes it through, i don't even see any difference between whats happening now vs a government DIP; other than in the end .gov doesn't own the company (and later have to incur additional expenses in selling off their vast stake).

Man what a defeatist attitude. You cannot have that attitude if you want to keep your rights

The US Treasury is providing the DIP. Instead of cluttering up GM's balance sheet with government debt to restructure, the government will take a position in the company based upon an estimated market cap when the company again goes public with an IPO.

The government is actually doing GM a favor by taking a position in the company because they will not have to pay interest on the DIP support. If GM produces as I believe they will, the government will be repaid.

In 2-4 years depending on when the market recovers, the GM IPO should do well for the new owners who financed its restructuring. Isn't that the point of Chapter 11 bankruptcy - find success and be rewarded and wipe out the failure or previous owners for making poorinvestment decision.

Bare in mind GM will be taking on more government debt from the CAFE loans that GM will apply for as will Ford, Chrysler and anyone else.

[ShadowDog]

They do, it's called the first amendment.

I'm not questioning the right to say anything, but one person's viewpoint rarely reflects the will of a nation or consumer-base. The manner in which some choose to offer their viewpoint also plays a big role in whether they will actually have an audience other than the echo of their own words in a garbage can.

[Drew Dowdell]

They do, it's called the first amendment.

They're allowed to be very very wrong and I'm allowed to call them out on it.