What Mitt Romney gets wrong about the Detroit automakers’ bailouts

Republican presidential hopeful Mitt Romney renewed his opposition to the Obama administration's bailout of General Motors and Chrysler today in several Michigan newspapers, contending President Obama's rescue made the companies worse...Romney's take just doesn't square with the facts, here's why:

Romney's a Michigan native; his father George Romney was a well-liked governor and head of American Motors. Yet Romney is neck-and-neck with rival Rick Santorum in polls ahead of Michigan's Feb. 28 primary in no small part because of his opposition in November 2008 to the bailouts that saved GM, Chrysler and thousands of Michigan jobs.


"Three years ago, in the midst of an economic crisis, a newly elected President Barack Obama stepped in with a bailout for the auto industry."


In fact, the bailout began with President George W. Bush, who was forced to lend GM and Chrysler $17.4 billion in December 2008 after Senate Republicans blocked a rescue plan in Congress. Bush told reporters just last week that he was warned by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson that if he didn't act to shore up GM and Chrysler, up to 1 million jobs could vanish. Knowing what we know now, says Bush, "I'd do it again."

Try to get you facts right stupid.

What is amazing to me is that the GOP clown car has sputtered down this far, but they still have not even decided on a candidate.

They have lacerated each other in the debates.

They have criticized President Obama as though he was the anti-Christ.

What they have not done is present a coherent message to the country about how they can improve the economy.

Yet, in spite of all that, there are many die-hard Republicans who are only waiting to see who is finally nominated, whoever the hell it is (probably even a damn monkey would do), just so that they can vote against President Obama!

. . . What is especially incomprehensible to me is that some of these folks are friends of mine who are otherwise intelligent, but politically blind!

Obama did not "save" GM

he paid off the unions
and he fucked the bond holders

GM is still destined to fail...
an international conglomerate being run by unions ;>))).....
as Wally used to say,"Sure,Eddie" (as in Eddie Haskell)

and speaking of clown cars,what is the re-VOLT-ing POS,
if not a clown car

BTW---when American Motors failed,it was liquidated and sold.
Nobody called in the dumbo-eared village idiot to fuck the investors.

Hell the government ran the Bunny ranch in to the ground. They can't even run a whore house. If the hookers had unionized they could have gotten a bail out like GM.

+1

Obama did not "save" GM

he paid off the unions
and he fucked the bond holders


[/COLOR] Originally Posted by RichardGozenya

Care to state some facts? Here's some.

The crux of Romney's argument: If Obama had not acted, private companies would have stepped in and run a "managed bankruptcy." What this ignores is that in the fall of 2008, BEFORE Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed.

Both companies' bankruptcies required money on a scale not seen in legal history. Unlike airlines, which can keep running with much smaller short-term loans while they restructure, automakers need massive amounts of up-front capital to pay suppliers and workers while they build cars; their finance companies need even more to keep making car loans that can bring in revenues. The potential damage wasn't just layoffs; Chrysler executives testified on the first day of bankruptcy that without immediate cash the company risked destroying hundreds of millions of dollars' worth of equipment.

Even after Obama took office, GM and Chrysler searched frantically for paths to avoid bankruptcy, including a possible merger. Chrysler held a one-week garage sale of its assets in February 2009, inviting anyone with enough money to bid for parts of the company. No one bit.

No entity blocked GM and Chrysler's path to the bankruptcy court except their own executives. Had the government not intervened as Romney suggests, GM and Chrysler likely would have been liquidated by their Wall Street bondholders, some of whom held out for a few more pennies on the dollar at the risk of the entire bankruptcy case. One auto industry think tank estimated doing so would have led to 1.3 million job losses and threatened Ford, Toyota and other automakers.

Chrysler's secured creditors were a group of Wall Street banks — including J.P. Morgan, Citigroup and Goldman Sachs — and investment firms, some of whom had bought the company's secured bonds in the months ahead of bankruptcy hoping to cash in. They could have rejected the government's offer of 28 cents on the dollar in cash for their $6.7 billion in bonds and paid to liquidate Chrysler themselves, but decided that not only would they come out even further behind, they'd also be blamed for destroying an American automaker. (GM's secured creditors − also mostly Wall Street banks — were paid in full, and endorsed the Obama bankruptcy plan.)

As for the "union-boss-controlled trust fund," that's what's known as a VEBA trust that now pays the health care of 426,409 retirees from GM, Ford and Chrysler — and in return, owns all future health-care obligations from the companies for those retirees. With this, Romney appears to argue that before hundreds of thousands of UAW retirees got health care, Wall Street should have been made whole. [by the way is this what you are suggesting. The bond holders should have taken care of and to hell with everyone else?]

If the Obama administration sold its 500 million shares in GM today, it would lose at least $14 billion. GM shares have struggled even as the company reported strong profits, in part over concerns about an underfunded pension plan. If GM shores up its pension costs, its shares could rise — although they would need to nearly double before the government broke even.

There's ample factual reasons to criticize the bankruptcies — from the treatment of Delphi's retirees and GM's unsecured bondholders to the advantages GM, Chrysler and Chrysler's new parent Fiat gained over Ford. But doing so requires acknowledging that Obama's decisions, including his call to save Chrysler when some advisors were ready to let it go, were mostly right: GM and Chrysler came out stronger and leaner, keeping jobs in the country that would have disappeared if they'd gone out of existence.

Even in Detroit's more conservative newspaper, the comments this morning on Romney's new op-ed are running about 2-1 against him. Romney has plenty of time to change minds, but these comments left the factory with a few too many defects -- and losing your home state over its keystone industry would be a political sting no amount of Vernors could soothe.

Obama did not "save" GM

he paid off the unions - nope
and he fucked the bond holders - did they lose their AIG credit default swaps or investment insurance?

GM is still destined to fail... Prove it, brainiac!
an international conglomerate being run by unions ;>)))..... So $8 BILLION in pofits last year shows union incompetence? You're a JOKE!
as Wally used to say,"Sure,Eddie"(as in Eddie Haskell)

and speaking of clown cars,what is the re-VOLT-ing POS, if not a clown car Work on your commas and other punctuation, Dick. That fragmented sentence needed a question mark!
BTW---when American Motors failed,it was liquidated and sold.
Nobody called in the dumbo-eared village idiot to fuck the investors.

"One of the things the government can't do is run anything. The only things our government runs are the post office and the railroads, and both of them are bankrupt."
Lee Iacocca

Originally Posted by RichardGozenya

What an original handle - Dick Goes In Ya. Cleverness like that is running rampant among the fiscal liberals who dishonestly call themselves "conservatives" here on the board.

Let's get a few things straight. You quote an absolutely 100% wrong concept from Lee Iacocca who got a loan from the government for Chrysler!

You accuse Obama when most of the bailout was planned and orchestrated by the Bush Administration while thrusting "end of the world" scenarios at the President-elect.

Since when were investors guaranteed anything and since when did major concessions by unions turn into a Presidential "sellout"?

There is one more thing while I'm contemplating your double-digit I.Q. A space follows a comma. Quit using it like a hyphen and, like half the other Republicans who don't pay attention now and didn't pay attention in English class in middle school either.

Why would we pay attention to the low intelligence posters on this site, especially while paying attention and learning from far more credible sources?

Please source your cut and paste articles. Thank you.

[/left]
What an original handle - Dick Goes In Ya. Cleverness like that is running rampant among the fiscal liberals who dishonestly call themselves "conservatives" here on the board.

Let's get a few things straight. You quote an absolutely 100% wrong concept from Lee Iacocca who got a loan from the government for Chrysler!

You accuse Obama when most of the bailout was planned and orchestrated by the Bush Administration while thrusting "end of the world" scenarios at the President-elect.

Since when were investors guaranteed anything and since when did major concessions by unions turn into a Presidential "sellout"?

There is one more thing while I'm contemplating your double-digit I.Q. A space follows a comma. Quit using it like a hyphen and, like half the other Republicans who don't pay attention now and didn't pay attention in English class in middle school either.

Why would we pay attention to the low intelligence posters on this site, especially while paying attention and learning from far more credible sources? Originally Posted by Little Stevie

Since you are a "low intelligence poster on this site":

What an original handle - Dick Goes In Ya. Cleverness like that is running rampant among the fiscal liberals who dishonestly call themselves "conservatives" here on the board.

Let's get a few things straight. You quote an absolutely 100% wrong concept from Lee Iacocca who got a loan from the government for Chrysler!

You accuse Obama when most of the bailout was planned and orchestrated by the Bush administration while thrusting "end of the world" scenarios at the president-elect. [no capitalization]

Since when were investors guaranteed anything, [comma required] and since when did major concessions by unions turn into a presidential "sellout"? [no capitalization]

There is one more thing while I'm contemplating your double-digit I.Q. A space follows a comma. Quit using it like a hyphen and [no comma] like half the other Republicans who don't pay attention now and didn't pay attention in English class in middle school either.[Neither did you.]

Why would we pay attention to the low intelligence posters on this site, especially while paying attention to [missing preposition] and learning from far more credible sources?

Please source your cut and paste articles. Thank you. Originally Posted by CuteOldGuy

Can't refute anything I have posted can you.

Please source your cut and paste articles. Thank you. Originally Posted by CuteOldGuy

Was written by a reporter in Detroit who reported on it as it happened.Was a Yahoo article yesterday.

In the interest of brevity, let's just call it "everything."

Saving Detroit was painful for the taxpayers, but vital for the economy of this country. It had to be done.

There is a very informative book that covers the entire history of the downfall of Detroit and how they got into the mess they found themselves in called Crash Course and I strongly recommend it to those who want an in-depth look at the downfall of the automakers.

Basically, it was because the unions became too strong and could strong arm Detroit management into extravagant pensions that only added to the ultimate cost of the cars and thereby gave a competitive advantage to Japan.

President Obama tackled the tough issue and made the right choice.

The Detroit managers did not further their cause by showing up in Washington begging for a bail-out while flying in their private jets, but that only shows how far out of touch some of these high echelon managers had become. They had no sense of perspective.

President Obama made the absolute right choice in firing Rick Wagoner from GM and bailing out the automakers.

. . . Frankly, I do not see how anybody can take issue with that decision unless they are just hell-bent on bashing the President for anything they can find or fabricate if they can't.

I just have one question for all of you. How many of you owned stock in GM before?

Saving Detroit was painful for the taxpayers, but vital for the economy of this country. It had to be done.

There is a very informative book that covers the entire history of the downfall of Detroit and how they got into the mess they found themselves in called Crash Course and I strongly recommend it to those who want an in-depth look at the downfall of the automakers.

Basically, it was because the unions became too strong and could strong arm Detroit management into extravagant pensions that only added to the ultimate cost of the cars and thereby gave a competitive advantage to Japan.

President Obama tackled the tough issue and made the right choice.

The Detroit managers did not further their cause by showing up in Washington begging for a bail-out while flying in their private jets, but that only shows how far out of touch some of these high echelon managers had become. They had no sense of perspective.

President Obama made the absolute right choice in firing Rick Wagoner from GM and bailing out the automakers.

. . . Frankly, I do not see how anybody can take issue with that decision unless they are just hell-bent on bashing the President for anything they can find or fabricate if they can't.


Originally Posted by Fast Gunn