Thursday, November 10, 2011

Rattner Debunks Romney Debate Spin on the Auto Bailout

Does anyone honestly think that either George Bush or Barack Obama wanted to bail out the auto industry? Does anyone honestly think that if there were a private option available either of them would have said, "Hey, no thanks, let's take the difficult road, and do this through the government! Can't wait to deal with Congress on this baby!"?


Well, that's what Mitt Romney would have you believe, and it's maddening to anyone who was even remotely paying attention to events during that time. Fortunately, the guy who was tasked with finding the answer to the problem is willing to step up today and call Mittens out on his duplicity. Or ignorance. Whichever it is.

Steve Rattner refreshes our memory on the situation with Lehman, and then gets to the autos, emphasis mine...

Similarly, when General Motors and Chrysler appeared in Paulson’s office in October 2008, the Bush Administration faced only two choices: Provide financing from TARP or watch the two companies close their doors, stop manufacturing cars and lay off all their employees. Suppliers and service providers to the auto sector would have also been severely affected. The consequences would have been two to three million people put out of work in a matter of weeks and utter devastation across the Midwest, including in Rochester, Michigan, scene of last night’s debate.

To be absolutely clear, there was no possibility of a “managed bankruptcy” of auto companies, banks or anything else. In the fall of 2008 and spring of 2009, the stock market was in a free fall – as was the economy and jobs – and there was not a penny of private capital available to finance any of these entities in a “managed bankruptcy.” The only kind of bankruptcy that could have occurred would have been a liquidation. And if we feel that 9% unemployment is unacceptably high, imagine what it would have been if any of these critical components of our economic system were allowed to simply melt

Say what you will about Rattner, he is the guy who had a front row seat to the entire white-knuckle financial aspects of this endeavor, and you can guarantee that if there had been a way to avoid government involvement, he would have found it.

As far as Mitt's other claims concerning the bailout, the AP did a little fact-checking there:

ROMNEY: President Barack Obama "gave GM to UAW, he gave Chrysler to Fiat."

THE FACTS: That's not what happened in the bailout.

A trust owned by the United Auto Workers received a 17.5 percent ownership stake in GM to help that trust pay for its retirees' health care. That stake has declined since then, after the company went public in November 2010. The trust now owns about 10 percent of General Motors. That's much smaller than the government's stake of about 30 percent, and it doesn't support the notion that the government "gave" the company to the union.

Moreover, the union did not get free rein in return for its share. It was barred from going on strike over wage issues during recent contract talks with GM and Chrysler, as a condition of the bailouts.

Nor did Obama give Chrysler to Fiat.

The Italian automaker Fiat received an initial 20 percent stake in Chrysler as Chrysler emerged from bankruptcy in 2009 in exchange for only management expertise and technology. Since then, Fiat has paid $1.8 billion to boost its stake to 53.3 percent, including a $500 million payment to the U.S. Treasury to purchase the government's 6 percent share of the company.

To be fair, the entire debate was relatively fact-free on the part of all the candidates on that stage. We all have our favorite moments of disgust and jaw-dropping shock at the nonsense being uttered, but we have to award extra credit to Mitt for cooking up such elaborate false talking points about the auto industry in front of a Michigan crowd.

I'm sure they are revising their memories of the entire event to fit the new Republican spin as we speak.

(hat tip to David Shepardson once again)