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Posts Tagged ‘Bailouts’

“Isn’t it a good thing today in America that we have an automobile manufacturing sector? If it had been up to them [Republicans], General Motors would be gone. If it were up to them, Ford Motor Company would probably be gone. Chrysler definitely would be gone”Harry Reid (Dummycrat from Nevada.)

First the obvious, Ford recieved no bailout cash.

Secondly lets say for the sake of arguement GM and Chrysler folded like a house of cards, wouldn’t that have aided Ford as it’s only U.S. competition would be gone?

The biggest problem with Reid’s statement is the Big Lie.

That lie being not many, if any were against saving GM or Chrysler what many were opposed to was Big Gov coming to the rescue.

What many wanted, including this writer, was for both companies to go thru the normal and long established backrupcy process.

To put it another way.. FOLLOW LEGAL PRECIDENT.

What we got was usurping decades of established law and the Obama Admin rewarding their union alllies with billions of dollars as they were placed ahead of the line over secured bond holders and others that would have owned a piece of both companies.

As it is the UAW owns about one third of both GM and Chrysler, talk about the wolf guarding the henhouse.

Interestingly enough TARP special inspector general released a report (45 pages available here) Sunday that not only makes Dingy Harry look the fool – not that it’s a hard thing to do – but lays to waste any thoughts the auto bailouts were a good thing.

I fact the report suggests many jobs were lost because of how the program was structured.

The report raised questions about whether the Obama administration’s auto task force considered the job losses from the closings of dealerships while pressuring the companies to reduce costs.

“Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses,” investigators said.

Those decisions resulted in “potentially adding tens of thousands of workers to the already lengthy unemployment rolls – all based on a theory and without sufficient consideration of the decisions’ broader economic impact,” the report goes on to say.

Read that again, these nitwits made their decision not on common ecnomic practice but some hair-brained theory.

Additionally they relied on a single consulting firm’s internal report recommending that the U.S. companies adopt foreign auto industry models to increase profits.

The IG also noted that “it is clear that tens of thousands of dealership jobs were immediately put in jeopardy as a result of the terminations by GM and Chrysler.” After extensive investigation, the watchdog concluded that “the acceleration of dealership closings was not done with any explicit cost savings to the manufacturers in mind.”

On page 33 of its report, Barofsky writes that “no one from Treasury, the manufacturers or from anywhere else indicated that implementing a smaller or more gradual dealership termination plan would have resulted in the cataclysmic scenario spelled out in Treasury’s response; indeed, when asked explicitly whether the Auto Team could have left the dealerships out of the restructurings, Mr. Bloom, the current head of the Auto Team, confirmed that the Auto Team ‘could have left any one component (of the restructuring plan) alone,’ but that doing so would have been inconsistent with the President’s mandate for ‘shared sacrifice.’”

And there you have it, social justice, at it “finest!”

In summation the inspector general found: “(A)t a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions’ broader economic impact.”

Update: William Tate notes the IG’s mention of the race factor (as well as gender) in protecting some dealerships.

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At the time of the government takeover of GM and Chrysler much, if not all of the criticism was centered on the debate over jobs.

Everyone in support on injecting billions into the two companies were doing their best Chicken Little impressions saying without taxpayer money the entire auto industry would fail at the cost of millions of home-grown jobs.

That was then, this is now and an inspector general report

Treasury Department’s Special Inspector General for the Toxic Asset Relief Program (SIGTARP) contends that President Obama’s push for General Motors and Chrysler to close thousands of dealerships across the country as part of their government bailouts “may have substantially contributed to the shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls, all based on a theory and without sufficient consideration of the decisions’ broader economic impacts.”

The SIGTARP report will further contend, according to Rep. Darrell Issa, the ranking minority member of the House Oversight and Government Reform Committee that it is questionable whether the closings were “either necessary for the sake of the companies’ economic survival or prudent for the nation’s economic recovery.”

Issa, who has been a vocal critic of the Obama administration’s handling of the GM and Chrysler government takeovers, said the SIGTARP report should “serve as a wake-up call as to the implications of politically-orchestrated bailouts and how putting decisions about private enterprise in the hands of political appointees and bureaucrats can lead to costly and unintended consequences.”

The California Republican also said the fothcoming report will say “GM did not consistently follow its stated criteria and that there was little or no documentation of the decision-making process to terminate or retain dealerships with similar profiles, or of the appeals process” and that “making termination decisions with little or no transparency and making a review of many of these decisions impossible…”

So, thousands of additional people are collecting unemployment due to ill-advised political meddeling in privates business.

Who’d a thunk it?

Accept those of us that saw it comming.

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