Bailout Watch 443: DetN's Howes: Bonusgate Highlights Anti-Detroit Bias

Robert Farago
by Robert Farago

Yes, I’m going to open this can of worms. Detroit News columnist Daniel Howes did so this morning—although his thoughts on Bonusgate somehow didn’t make it to the paper’s homepage. Howes’ main argument: how can the Obama administration claim that they had to pay $165M worth of executive bonuses because they were legally obliged to do so—when they’re happy to force Chrysler and GM to renegotiate legal contracts with the unions and bondholders as a precondition for double dipping at the bailout buffet? And you know what? He’s right, even if he somehow forgets the seven million [taxpayer] dollars ChrCyo and The General are spending for lobbying our legislators and, by extension, commander-in-chief.

Perpetuating this double standard — one set of rules for troubled Wall Street firms with a demonstrable record of fat campaign contributions and another for automakers with union labor and little clout in Washington — is arbitrary, indefensible and deserves the backlash buffeting Congress and the Obama administration.

And then, of course, Howes goes too far.

The issue, here in Detroit, isn’t whether GM’s business model is broken and in desperate need of repair, or that its debt load is unsustainable. All true. It’s that the federal government appears complicit in a campaign to dismantle a cornerstone of American manufacturing even as it allows taxpayer dollars to be rewarded to those at the epicenter of the global financial meltdown.

In this case, just because Howes is paranoid doesn’t mean the feds are out to get him (or his pals). Quite the contrary. They seem to be falling all over themselves to keep the zombie automakers out of bankruptcy court. Still, it’s hard to tell where Danny’s going with this one.

Union deals can be trashed if political critics demand it in exchange for federal loans. Executive employment contracts can be deemed worthless, as AIG’s are likely to be by week’s end. Contracts between a lender and a borrower can be reworked by a bankruptcy judge, weakening a fundamental economic relationship and undermining the recovery of the flat lining mortgage market.

Is this what we want?

So Howes doesn’t want Washington OR a bankruptcy judge to screw around with Chrysler and GM. So . . . what? We just write them a check and piss off? Surely Howes sees that the automakers’ management is broken, and that C11 is the only fair, equitable and realistic way for them to survive as anything other than a government-sponsored enterprise (i.e., not a business per se). Doesn’t he?

Robert Farago
Robert Farago

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  • 1996MEdition 1996MEdition on Mar 18, 2009

    Time to break out my old copies of the Fountainhead and Atlas Shrugged.....we've barely had 2 months of socialist wealth sharing and look at how greedy everyone is getting.

  • Benders Benders on Mar 18, 2009

    I think a bigger deal is made of union contracts because they cover all the benefits provided to a very large percentage of the workers. I'm guessing that AIG can up the co-pay on their health insurance unilaterally and not many of their employees receive outlandish bonuses. Plus, no one is suggesting that we tax autoworkers at a higher rate until the contracts can be renegotiated. That would be a good way to force the end of the jobs bank; tax anyone earning a paycheck but not doing work in Detroit 100% (I think that would include Wagoner too). But no one is suggesting that because that is somehow a necessary wage but the bonuses are frivolous, even though they are in a contract and in fact, a large portion of these people's income they often depend on.

  • MaintenanceCosts People who don't use the parking brake when they walk away from the car deserve to have the car roll into a river.
  • 3-On-The-Tree I’m sure they are good vehicles but you can’t base that on who is buying them. Land Rovers, Bentley’ are bought by Robin Leaches’s “The Rich and Famous” but they have terrible reliability.
  • SCE to AUX The fix sounds like a bandaid. Kia's not going to address the defective shaft assemblies because it's hard and expensive - not cool.
  • Analoggrotto I am sick and tired of every little Hyundai Kia Genesis flaw being blown out of proportion. Why doesn't TTAC talk about the Tundra iForce Max problems, Toyota V35A engine problems or the Lexus 500H Hybrid problems? Here's why: education. Most of America is illiterate, as are the people who bash Hyundai Kia Genesis. Surveys conducted by credible sources have observed a high concentration of Hyundai Kia Genesis models at elite ivy league universities, you know those places where students earn degrees which earn more than $100K per year? Get with the program TTAC.
  • Analoggrotto NoooooooO!
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