My commitment is to the American taxpayer. My commitment is to recover every single dime the American people are owed… We want our money back and we’re going to get it.
Without even getting into the politics of President Obama’s proposed “financial crisis responsibility fee,” it’s easy to see that the initiative holds a wealth of implications for America’s TARP-recipient automakers. In Obama’s new rhetoric, taking TARP money put businesses in a new category of special obligation to the taxpayers. Though the fee is targeted at financial institutions, the principle applies just as much to Detroit.
Banks owe the government about $60b in TARP money, while GM and Chrysler owe about $50b. Unlike the financial institutions though, it’s clear that GM and Chrysler will never be able to pay back their full obligation to the taxpayers. This has Wall Street types in a fury, accusing the White House of forcing them to subsidize Detroit.
The real irony in all this isn’t that successful banks will be penalized while failing Detroit gets a pass. That makes perfect sense, because as Rep Barney Frank puts it “getting money from these banks is a good way to expand government revenue without expanding the deficit.” There’s no such money to be had from GM and Chrysler.
The real irony is that the bank bailout allegedly took place because nobody understood the real nature of the crisis, shrouded as it was in the opacity of financial industry jargon. Now that the moment of crisis is over, the banks are back to making money, while the automakers are still dreaming of that first post-bankruptcy profit. Which one turned out to be the more difficult, complex industry?
If you don’t want banks making risky bets you can tie “fees” to their leverage ratios. But how do you legislate your way to a successful automaker?