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U.S. Plans Key Role In Naming GM Board

Government's Sway Over Firms It Aids Is Topic of Debate

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President Obama speaks about his administration's new policy for General Motors, giving the auto giants working capital for 60 and 30 days to come up with a plan to become viable in the long term.
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Washington Post Staff Writers
Wednesday, April 1, 2009; Page A01

The Obama administration will play a key role in reshaping General Motors' board of directors over the next six months, potentially giving it even greater control in the management of the storied American manufacturer.

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The president's auto task force plans to consult with the company as it replaces a majority of its board, a White House official said. The board today largely consists of the current and former chiefs of major U.S. corporations such as Coca-Cola, Ernst & Young, Pfizer and Eastman Kodak. It is not known which of the 12 board members will leave.

The president said Monday that "the United States government has no interest in running GM." But in practice it is already exerting tremendous influence over it, a situation that has triggered fierce debate over how much power the government should wield over the companies that it aids.

Kent Kresa, 71, GM's new chairman, said yesterday that company officials will seek to replace a majority on the board by August, as the automaker moves to restructure operations.

"There will be continuing coordination as decisions about the leadership of the company are made," a White House official said yesterday. "Folks from the autos task force will be involved in those decisions."

Kresa, a former Northrop Grumman chief executive who has been a GM director since 2003, was selected to be chairman by the Obama administration after it ousted chairman and chief executive G. Richard Wagoner Jr. on Sunday. Fritz Henderson was named chief executive.

Some critics characterize the White House's removal of Wagoner as a move toward European socialism. In addition to forcing leadership changes at GM, President Obama on Monday said that Chrysler must strike a partnership with Italian automaker Fiat, and that GM must further cut its already shrunken workforce and product lines.

"They have opened Pandora's box -- the U.S. government has decided they know better than the private company," said Sen. Bob Corker (R-Tenn.) "There is no question that this country is moving down a very different and foreign path. We have crossed this threshold: We own this company and we are telling it what to do."

But defenders say the government must make changes at the ailing companies to safeguard the billions of dollars being invested by taxpayers.

"There's a new CEO and new chairman of the board," said Rep. Sander M. Levin (D-Mich.). "The government will play an active role as with Fannie Mae, Freddie Mac and other institutions with a major investment from taxpayers."

Levin turned aside the possibility that the government will run the company.

"It's clear they want this restructuring accelerated with the corporation taking a leading role," Levin said.


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