Saturday, June 13, 2009

Crony capitalism, Obama style

People watching the news probably know that new Government Motors CEO Edward Whitacre has announced that he doesn't know anything about cars. In the Obama administration, that in itself would qualify him to run what used to be the world's largest car company.

However, he's even got a better qualification as the man who made White House Chief of Staff
Rahm Emanuel rich with a very sweet deal during Whitacre's time as head of telecom giant SBC.

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.

Rhambo ended up with his biggest payday outside of politics - a $16 million windfall courtesy of his ties to the machine."

But that's not all,

Bill Daley, Bill Clinton's commerce secretary and brother of Chicago's popular Democratic mayor, was named SBC's president by Whitacre in 2001. His responsibilities, according to the official release, included regulatory matters, governmental initiatives, and external and international affairs.

In other words, he became a lobbyist/door-opener for the corporation. He got a $1.1 million signing bonus from Whitacre, a starting salary of $600,000 and a bonus of no less than $600,000 in 2002, plus stock options, a country-club membership and a monthly car allowance, including free fuel and maintenance."

No wonder Obama decided that
Whitacre was the perfect man for the job. Taxpayers and investors will get hosed, but there should be major money making opportunities for Obama's political friends.

Imagine the headlines in all the major media if Bush had made this kind of appointment.

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