AIG makes Detroit look good

GM Ceo Rick Wagoner can't resist pointing out the differences between the auto bailouts and the Wall Street ones

Published March 17, 2009 3:37PM (EDT)

When politicians erupted in anger over the private jets the Big Three automakers took to testify on Capitol Hill last year, you might have figured nothing could ever make the Detroit executives look like wise old hands at the political game.

You would be wrong.

The fury over AIG's $165 million bonuses is quickly eclipsing the political bluster over the auto bailout, and even the auto executives know it. At a breakfast meeting this morning with reporters, sponsored by the Christian Science Monitor, General Motors CEO Rick Wagoner couldn't help piling on a little bit.

Asked whether the bonus controversy is poisoning the political environment against government aid to private corporations, Wagoner at first demurred. "Well, I think it would be better for all of us if this weren't playing out this way," he said.

But then he quickly pivoted to point out the differences between giving money to car companies -- who got loans, totaling $17.4 billion, last fall, and who are asking for another $21.7 billion now -- and giving it to financial firms like AIG.

"We've been pretty clear on the amount of funding support we need, which is dramatically smaller," Wagoner said. "The kind of business we are has a dramatically larger footprint," meaning more people are employed, directly and indirectly, by the Big Three and their suppliers than by Wall Street firms.

"In the GM case, everybody's got skin in the game," he went on. "Everybody who could participate is, from executive salary reductions involving all of our executives and almost all salaried people, to signifcantly re-cutting labor contacts with unions, to dealers to suppliers. My pitch is, we're all in this, and we understand that it's a tough ask, and we're doing everything we can to make it as fair for everybody as we can."

GM's cash flow this year is $2 billion better than expected, Wagoner said. The company is negotiating with unions and creditors to restructure some of its obligations.

AIG executives are set to testify Wednesday before a House subcommittee; they might want to look back at the Detroit example to learn how to come before Congress properly chagrined before taking federal cash. Wagoner and his colleagues, chastened by the outrage over their jet-setting ways, convoyed from Detroit to Washington when they came back to ask again for money.

By Mike Madden

Mike Madden is Salon's Washington correspondent. A complete listing of his articles is here. Follow him on Twitter here.

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