Steven Rattner Cross-Examines Romney. Hooray.
Steven Rattner, the lead adviser on the Obama administration’s auto task force in 2009, has an op-ed titled “Delusions About the Detroit Bailout” in today’s New York Times. Some highlights:
As a presidential aspirant, Mr. Romney evidently hasn’t felt a need to be consistent or specific as to what should have been done to address the collapse of the auto industry starting in late 2008. But the gist is that the government should have stayed on the sidelines and allowed the companies to go through what he calls “managed bankruptcies,” financed by private capital.
That sounds like a wonderfully sensible approach — except that it’s utter fantasy. In late 2008 and early 2009, when G.M. and Chrysler had exhausted their liquidity, every scrap of private capital had fled to the sidelines.
I know this because the administration’s auto task force, for which I was the lead adviser, spoke diligently to all conceivable providers of funds, and not one had the slightest interest in financing those companies on any terms. If Mr. Romney disagrees, he should come forward with specific names of willing investors in place of empty rhetoric. I predict that he won’t be able to, because there aren’t any.
Rattner then says that without government financing, the two companies would have been unable to undergo Chapter 11 reorganization, and instead would have been forced to cease production and liquidate. He then addresses the claim that Obama improperly rigged the reorganization to favor the UAW:
Among Mr. Romney’s grievances — and to be fair, those of other opponents of the auto rescue — is that the auto task force trampled on bankruptcy precedents and even the law to effect President Obama’s plan of “shared sacrifice” by all stakeholders.
What he conveniently ignores is that the president’s plan was litigated throughout the federal court system — all the way to the Supreme Court, in the case of Chrysler — without so much as a nod to the opponents from a single judge.
“[E]very stakeholder received more from our plan than if the companies had been left to go bankrupt on their own,” Rattner says.
My question is: Why has Romney gotten away for so long without being asked during say, one of the 20 debates, who, exactly, would have provided the private funding that he claims was available. And, if he can’t answer that question, why does he keep making the claim?
Apart from the obvious—that Romney habitually simply fabricates statements of fact to support his ideology and his political ambitions—this particular fabrication seems to me to get to the very heart of the supposed raison d’être for his candidacy: his business and economics acumen. He either was dangerously mistaken about the availability of private funding for the restructurings or, as president, he would just make up evidence on which to base critical decisions—with results as dramatically different than he predicts at the outset as the auto company bankruptcies would have been had Bush and Obama actually followed his advice as he now claims they did.
Why has this not occurred to anyone until now? Anyone who matters, anyway.
Mit has to say he was against the auto company bsilouts in order to feed primary voters what they demand to hear. Why do you take what he says on this stuff or anything for that matter seriously or at face value? Don’t tell me you believe what comes out of his mouth. How silly.
By demonstrating that he will say anything he is demonstrating the crucial requirement needed by any leading US politician or institutional/corporate player.
We are at a period Russ Winter calls Peak Orwell. I am not sure the peak is, maybe it is a permanent pleateau here but whatever, Mitt is showing he has the chops to be president.
When the pleader in chief in bankruptcy court is POTUS, there is no doubt the auto bailout was fast tracked and the rules were severely bent.
Question is, given the circumstances, was that justified? (Lots of presidents have bent rules during emergencies).
Most of us think it was justified, but let’s not pretend it was a pure process.
Romney can say about anything he wants and no one can prove any different, because history is history.
Actually, rustbelt, in this case, Steven Rattner can prove that there was no private financing available, by stating that he spoke on behalf of the Administration to all conceivable providers of private funds and rejected by all—and by publicly challenging Romney to identify the private sources he claims were available, and watching Romney remain silent. Eventually, a reporter—possibly during the debates with Obama next fall, if Romney gets the nomination—will ask Romney to identify the private sources he says were available. Romney will either identify a private source and say how he knows that source was available, or her won’t. Your claim that Romney can’t be proved wrong because history is history is a non sequitur.
As for your claim that when the pleader in chief in bankruptcy court is POTUS, there is no doubt the auto bailout was fast tracked and the rules were severely bent, that’s sort of funny to someone like me who knows that the federal appellate courts are stocked mostly with rightwing Republicans who are, um, a bit less friendly to organized labor than they are to venture capitalists and to Democratic administrations. Oh, and then there are the Fab Five Supreme Court majority, who, well, …
More obvious, though, is this: A key objective of bankruptcy proceedings is to enable the company to continue on rather than liquidate, if possible. That’s the stated justification for the now-routine bankruptcy-court approvals of restructurings that decimate pension agreements. See, e g., the United Airlines bankruptcy order, which a commenter to one of my AB posts last week discussed. And it was by sole dint of Obama’s decision to follow Bush’s lead and agree to the bailout that GM and Chrysler were restructured rather than liquidated.
The point: Bankruptcy courts do give strong consideration to the wishes of the provider of the funds that enable the restructuring. In these cases, that was the Obama administration.
Been a while since I have seen this “non sequitur” used. Hmm, Slate’s The Fray?
Most of the objectors to the automotive bailout are angry because the unions were not trashed. As it was they did have to take over the retirement funds which were emptied by automotive management over forecasting of returns which allowed the removal of the excess funds which had built up over the years. We still never found out how tied into the CDS market GMAC was before it too was relieved.
Yeah. Excellent point. Funny how that’s never mentioned.
I miss The Fray.
I supported the bailout, but it was a political process as much as a legal process, and the people without the political clout got clobbered.
By the way, Michigan tax preparers tell me many of the bond holders who got clobbered were blue collar and white collar GM retirees.
Bondholders lack political clout? Really?
And, many of the bondholders who got clobbered were blue collar and white collar GM retirees—who because of the bailout still have their pensions and retiree health benefits relatively intact, just like the retirees who weren’t bondholders.
Yeah, excellent point, run. Funny how that’s never mentioned.
I miss The Fray.
well, oddly enough, i always supposed the reason you took retirement benefits as part of your pay, instead of taking the cash and buying bonds with it, was to protect yourself from the bond market.
of course that was before the corps discovered how easy it was to get rid of their retirement obligations by declaring bankruptcy.
anymore what they have convinced me of it that private pensions are unreliable, and if the people had any sense they’d double the size of Social Security… both the “tax” and the benefits,, which operates outside the bond market and should be “guaranteed.”
of course even that depends on the honesty of congress… now by no means assured… and the hope that outsourcing of jobs to china won’t bring down the wage base to a level where workers can no longer afford to save anything for their retirement… even via SS.
good luck, guys. ancient Egypt is in our future.