Good question!  How does  ‘the government’ have the authority to do this? 

Answer: From Tom Krishner, AP: ” The lender will always come in and push levers of corporate control,” said Douglas Baird, a professor who SPECIALIZES  in BANKRUPTCY at the University of Chicago Law School.

“It will basically say: ‘You want me to lend money. But there are these kind of targets you have to hit.’ PRIVATE lenders do it all the time,” Baird added.

President Barack Obama, in detailing his plans for the industry Monday, said the government has no interest in running GM. But at the same time, the White House has specifically rejected a restructuring plan turned in by GM and ordered it to make deeper cuts.

“What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company,” Obama said.

GM and Chrysler are alive today only because of $17.4 billion in government loans.”

Or, in other words: he who loans the money calls the plays…

see:http://www.cleveland.com/plaindealer/stories/index.ssf?/base/business-12/1238488404322180.xml&coll=2