A labor union that had contributed millions to Democrats and his election campaign was granted an ownership share of Chrysler and a major stake in GM, two flagships of the industry.The U.S. Department of Treasury American taxpayers was asked to become a majority stockholder of GM. And a politically connected and ethically challenged Obama-campaign contributor, the financier Steven Rattner, was asked to preside over all this as auto czar.
This was crony capitalism on a grand scale. The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.
My view at the time and I set it out plainly in an op-ed in the New York Times was that "the American auto industry is vital to our national interest as an employer and as a hub for manufacturing."
Instead of a bailout, I favored "managed bankruptcy" as the way forward.
Managed bankruptcy may sound like a death knell. But in fact, it is a way for a troubled company to restructure itself rapidly, entering and leaving the courtroom sometimes in weeks or months instead of years, and then returning to profitable operation.
In the case of Chrysler and GM, that was precisely what the companies needed. Both were saddled with an accumulation of labor, pension, and real estate costs that made them unsustainable. Health and retirement benefits alone amounted to an extra $2,000 baked into the price of every car they produced.
From The Detroit News:
Romney op-ed: U.S. autos bailout 'was crony capitalism on a grand scale' | The Detroit News | detroitnews.com