Crony Capitalism On A Grand Scale

An article in yesterday’s New York Times, which I think deserves much more notice than it seems to be getting,  says that last week, “Mr. Romney’s campaign held an elaborate “policy round table” fund-raiser at a Washington hotel, featuring panel discussions run by lobbyists [who are] former cabinet officials or members of Congress.”
Today in the Detroit News, that very same Mr. Romney has an op-ed piece complaining that the GM and Chrysler bailouts were “crony capitalism on a grand scale.”  The reason for the epithet?  That by prior agreement heading into the managed bankruptcies of those companies—bankruptcies that in fact were “managed” ones rather than just plain bankruptcies, and that therefore allowed the companies to emerge from bankruptcy and continue operating—union jobs received more protection than non-union jobs, and because Chrysler’s secured creditors were not protected. 

Okay, well actually, he doesn’t acknowledge that the two companies did file for bankruptcy, and instead claims that they should have been forced to do so.  To file for “managed bankruptcy,” that is.  At least if I understand him correctly.  And actually, he claims (again, if I understand him correctly) that GM’s secured creditors will, by fiat of the Obama administration, not be repaid in full.  And he says that were it not for the bailouts, the companies would have survived without layoffs, or without as many layoffs, or without non-union layoffs … or ….


In fact, as every Michigander (and Ohioan) knows, both companies filed for bankruptcy, the bankruptcies were “managed,” and both emerged from it much-downsized but still employing many thousands of people directly or via their suppliers.  And, as they also know, neither company would have emerged from bankruptcy at all without the government’s financial assistance.  Which is why the government agreed to the bailout.  

And, according to a comment to the op-ed, GM’s secured creditors in fact were promised that they would be repaid in full, and expect to be. 

So what’s Romney’s point? Best as I can tell, adding the actual facts to the op-ed, it’s that Chrysler’s secured creditors, who would have been paid virtually nothing had the company dissolved, weren’t privileged over the employees, in the restructuring.  This doesn’t sound to me like a serious plea for votes.  Not from employees—even laid-off ones—anyway.  And, since most of Chrysler’s secured creditors probably don’t vote in Michigan, not from the secured creditors either.  But maybe they’ll attend his next fundraiser, to meet those lobbyists whom Romney will delegate his policymaking to.