Quote Of The Day: Payback's A Bitch Edition
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?
More by Edward Niedermeyer
Latest Car Reviews
Read moreLatest Product Reviews
Read moreRecent Comments
- Lorenzo I just noticed the 1954 Ford Customline V8 has the same exterior dimensions, but better legroom, shoulder room, hip room, a V8 engine, and a trunk lid. It sold, with Fordomatic, for $21,500, inflation adjusted.
- Lorenzo They won't be sold just in Beverly Hills - there's a Nieman-Marcus in nearly every big city. When they're finally junked, the transfer case will be first to be salvaged, since it'll be unused.
- Ltcmgm78 Just what we need to do: add more EVs that require a charging station! We own a Volt. We charge at home. We bought the Volt off-lease. We're retired and can do all our daily errands without burning any gasoline. For us this works, but we no longer have a work commute.
- Michael S6 Given the choice between the Hornet R/T and the Alfa, I'd pick an Uber.
- Michael S6 Nissan seems to be doing well at the low end of the market with their small cars and cuv. Competitiveness evaporates as you move up to larger size cars and suvs.
Comments
Join the conversation
good point the CEOs, merchant bankers and other leeches will always get their cut