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March 31, 2009

Is Ed Montgomery the new car czar?

There doesn't seem to be anything in his resume or job title that would indicate Edward Montgomery, President Obama's new director of recovery for auto communities and workers, will be dictating corporate policy for General Motors or other car companies. He's a "people" economist, not an industrial technocrat, focusing on workers, community economic development etc. From the Web site at the University of Maryland, where he is dean of the College of Behavioral and Social Sciences:

Dr. Montgomery has published numerous papers and articles on local economic development, youth unemployment, cross national comparisons of labor market performance, savings and pension policy, Medicaid and Social Security, labor unions and workplace smoking regulations.

Economist Peter Morici, Montgomery's colleague at Maryland, probably knows a lot more about the car business than he does. But that hasn't stopped people from predicting Montgomery will be calling the shots for GM. From Scott Calvert's story on Montgomery in today's Baltimore Sun:

As if his job description were not broad enough, some experts think Montgomery will get involved in trying to turn around GM and Chrysler, along with other members of the presidential task force on the auto industry.

"I think he's going to have to oversee some major plant closings and job losses," Chaison said. "And I think he's going to have to design a bankruptcy. My personal view is General Motors is heading toward a bankruptcy. Chrysler may well be."

Charles Craver, a labor relations expert at George Washington University, expects Montgomery to wield considerable influence. "I have the sense he's going to have to oversee the restructuring of the companies," Craver said.

Nothing was said about this yesterday. Obama said Montgomery would help "create new manufacturing jobs and new businesses where they're needed most - in your communities. And he will also lead an effort to identify new initiatives we may need to help support your communities going forward."

But everything is fluid in the administration's mighty morphin' bailout/stimulus plan. Not much more than a year ago Treasury Secretary Hank Paulson was saying no taxpayer money would be used to ameliorate the mortgage crisis. Now we're at -- what? -- trillions and counting. Montgomery may yet be the car czar.

Posted by Jay Hancock at 8:33 AM | | Comments (3)


I wonder if Dr. Montgomery and the Obama administration have given any thought to GM's huge pension fund's disposition in the event of a structured bankruptcy. If turned over to the PBGC you can expect 500,000 more mature Americans to be without healthcare and people who devoted their lives to GM and were never a burden to to 'system' will be now at poverty levels.
I still have not met anyone who would be willing to buy a car from a bankrupt company . . . the fact that the US government will back warranties, is not very comforting at all. They haven't had a pristine record.
I also wonder if the rumors are true that AIG insures the pensions of Congress . . . hmmm could have influenced the governments decision to go so very leniently on them.

The goal of the government should be to have all Americans eligible for the same benefits as our Congressional leaders.
Thank you

Obama is going to double cross the UAW, double cross the rustbelt states, and shrink the auto companies into small organizations making only small and "green" cars.

In the short term this will be a disaster for the rustbelt states.

In the long term the green strategy is going to be good for only Toyota, Honda, etc., as the survivors will reign.

(I'm no insane conspiracy freak, if that is what anyone is thinking.)

Montgomery is supposed to find a way to heal the scars for communities and individuals, and that will be a giant flop as well. We have been waiting for the "jobs of the future" since NAFTA was passed.

As an update, the administration leaked its' strategy for GM today, a pre-pack bankruptcy splitting the company into two, the viable and the junk, with the viable to emerge quickly and the junk to be sold off.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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