Romney wrong on auto bailout

Mitt Romney tried to reframe his opposition to the government bailout of General Motors and Chrysler in 2008-09 by saying that what he had said was that the government should have stayed on the sidelines and allowed the auto industry to go through "an orderly bankruptcy procedure."

He now likes to add, "I was right."   GM and Chrysler did go through bankruptcy and now they are thriving again.

Not so fast, says Steven Rattner, who was the lead adviser to the government's auto task force that oversaw the bailout.   Rattner writes in a New York Times op-ed:

That sounds like a wonderfully sensible approach — except that it’s utter fantasy. In late 2008 and early 2009, when G.M. and Chrysler had exhausted their liquidity, every scrap of private capital had fled to the sidelines.

I know this because the administration’s auto task force, for which I was the lead adviser, spoke diligently to all conceivable providers of funds, and not one had the slightest interest in financing those companies on any terms. If Mr. Romney disagrees, he should come forward with specific names of willing investors in place of empty rhetoric. I predict that he won’t be able to, because there aren’t any.

Without government financing — initiated by President George W. Bush in December 2008 — the two companies would not have been able to pursue Chapter 11 reorganization. Instead they would have been forced to cease production, close their doors and lay off virtually all workers once their coffers ran dry. . .

Now, less than three years later, G.M. and Chrysler have markedly exceeded our expectations. . . .And they are hiring new workers for the first time in many years. . . .  All of this was accomplished at relatively low cost; taxpayers will receive back the vast preponderance of the $82 billion that was invested.

 So, let's be honest here, Mitt.   Your plan would not have worked, and you can't have it both ways.   If your plan had been followed, says Mr. Rattner -- himself a long-time Wall Street executive -- "More than a million jobs would have been lost, at least for a time. Michigan and the entire industrial Midwest would have been devastated."

What enabled the companies to survive and continue operation (and preserve jobs) was the government's bailout money.   Without that, they could not have continued operating enough to go through bankruptcy.  They would simply have failed and closed.

Ralph