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.
-snip-
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.
-snip-
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.
more: http://autos.yahoo.com/blogs/motoramic/mitt-romney-gets-wrong-detroit-automakers-bailouts-154006392.html
============
This is a killer issue for Romney which is why he is doubling down claiming he is still right. Only Romney lovers and brainless RWingers will believe that.
= new reply since forum marked as read
: