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Congress reacting to backlash finally, but now they're hypocrites

Change, too little too late? (http://www.dailynewstribune.com/opinion/x1585010097/Press-Why-a-double-standard-on-Detroit)
http://www.cleanmpg.com/photos/data/501/apg_congress_auto_081120_mn.jpg
Bill Press - Daily News Tribune - Nov 30, 2008
I'm glad to see they are no longer throwing tax payer's money around like some kind of wicked party but now they are hurting one of my two favorite industries, the auto industry. -- Ed.

No wonder people don't trust politicians. Americans just voted overwhelmingly to steer this country in a new direction, yet Congress has ignored the pleas of Barack Obama and voted instead to continue the disastrous economic policies of George W. Bush by letting the American auto industry collapse.

In the acrimonious debate over an emergency loan to Detroit, we saw some of the worst examples of political preening, pretending and pontificating ever. And not just by Republicans.
Suddenly, before approving any financial help to automakers, members of Congress demanded answers from them that they never demanded from Wall Street. Everything they wanted to know was reasonable: What kind of changes are they going to make in their day-to-day operations? What structural changes have they agreed to? What limits are they going to put on executive salaries? What guarantees exist that we'll get our money back?

Again, those are all good questions, and questions Congress should ask. But Congress members were hypocrites in demanding answers to those questions from Detroit automakers when they had so recently approved a $700 billion bailout of Wall Street banks and financial institutions with nary a peep: no oversight, no accountability, no conditions, no restrictions.

Have Ford, Chrysler and General Motors made mistakes? Absolutely. …

Should Ford, Chrysler and General Motors be forced to change their ways? Absolutely. Indeed, this is the chance for Congress to force automakers to make the structural changes they have so long resisted: retooling plants to produce smaller, greener cars; dumping SUVs and Hummers; speeding up production of electric, photovoltaic or hydrogen non-fossil-fuel vehicles; and placing limits on executive compensation. Those are fair demands to make of Detroit in exchange for a federal bailout.

There's nothing wrong with putting strings on federal dollars. But here's my question: Why the huge double standard? Wall Street firms, remember, also screwed up. Indeed, they're the ones that drove us into the ditch in the first place. So why should they get all the dollars they want with no questions asked and no strings attached, yet Detroit be forced to jump through so many congressional hoops? Or why, as decided by George Bush and Hank Paulson - and endorsed by Congress - should banks and financial institutions get the entire $700 billion, while automakers most likely get not a penny of federal assistance?
… http://www.dailynewstribune.com/opinion/x1585010097/Press-Why-a-double-standard-on-Detroit

Why the huge double standard?

1. There is a good reason for the Wall Street melt down,
http://www.youtube.com/watch?v=63siCHvuGFg
and that reason was the stupidity of certain politicians.

2. Bad management decisions and greedy unions are mainly the blame for the automaker meltdown.


I'm pretty sure that US automakers would do a lot more for America if they were
suddenly placed under intelligent management.

Right but number one pushed an already teetering number 2 over the edge by running into them with a tank's front edge (not just shouting "Jump, Jump")

sigh....I guess congress doesnt understand how to use our hard earned dollars that they see before we do. As the article says, too little too late...I'm hoping they're not too late however.

It makes me laugh that the politicians keep grilling the automakers for making "huge, inefficient" SUVs and large cars yet if we were to view a spread of the vehicles sitting in the garages of some of these same politicians, we'd find those exact things. Easy to criticize, hard to change.

Pot calling the kettle black?

Why the huge double standard?

1. There is a good reason for the Wall Street melt down,
http://www.youtube.com/watch?v=63siCHvuGFg
and that reason was the stupidity of certain politicians.

2. Bad management decisions and greedy unions are mainly the blame for the automaker meltdown.


I'm pretty sure that US automakers would do a lot more for America if they were
suddenly placed under intelligent management.

The Wall Street meltdown has more to do with Detroit's need for a bailout than most people think. The standard corporate finance "Plan B" for dealing with hard times is to raise money in the capital markets -- which, in case you hadn't noticed, aren't functioning very well now. It's mostly demagogery to say that the gov't shouldn't make loans to industries when the financial markets aren't working.

I guess the Wall Street bail out double standard lets you know who grasps the levers of power in Washington.

Wandering off-topic a bit, the Fox News clip was a cute campaign commercial, but didn't seem to grasp the source of the meltdown. Discussing the leverage provided the credit derivative swaps (http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom)in a market based on bogus securities ratings provided by issuers' captive private ratings agencies is less appealing to Fox than blaming Barney Frank for putting poor folks in homes. Probably when Glass-Steagall was overturned we should've implemented some regulations that would've helped keep that in check.

Well... as I've said before, the whole Bailout Bonanza came at the tail end of an eight-year-long Bush kleptocracy where the top 1% wealthiest basically stole and stole and stole until there was nothing left to steal. And the middle class just got forced to cough up a trillion dollars to replace what the super-rich routed over to their accounts in the Caymen Islands.

And the Republicans thought this was just good, decent, capitalism at its best. I wonder why they lost so badly on November 4th?

The original 'Bailout' was to help secure the mortgage crisis; something that came about because of deregulation during the Clinton administration and abuse by the mortgage companies themselves. The original Bailout was NEVER meant to be used by manufacturing businesses. Stop and think about it. There are many businesses that fail. Since when is it the tax-payers responsibility to insure all of them.

I really think the key to our financial predicament is our attitudes. Whether it be on Wall St. or Main St. people have acted completely for the now. It's the parable of the grasshopper and the ant. My biggest concern with this Bailout is that we will not learn from it and that the issue will come back haunt us. We could, very easily, find ourselves facing an even worse situation than we are now, only next time we have the additional burden of the heavier taxes.

I think the wisest thing to do is to let the Big Three file bankruptcy followed by restructuring. We've done more for the Big Three than a lot smaller companies could ever hope for.

It makes me laugh that the politicians keep grilling the automakers for making "huge, inefficient" SUVs and large cars yet if we were to view a spread of the vehicles sitting in the garages of some of these same politicians, we'd find those exact things. Easy to criticize, hard to change.

Pot calling the kettle black?Excellent point!

The original 'Bailout' was to help secure the mortgage crisis; something that came about because of deregulation during the Clinton administration and abuse by the mortgage companies themselves. The original Bailout was NEVER meant to be used by manufacturing businesses. Stop and think about it. There are many businesses that fail. Since when is it the tax-payers responsibility to insure all of them.

I really think the key to our financial predicament is our attitudes. Whether it be on Wall St. or Main St. people have acted completely for the now. It's the parable of the grasshopper and the ant. My biggest concern with this Bailout is that we will not learn from it and that the issue will come back haunt us. We could, very easily, find ourselves facing an even worse situation than we are now, only next time we have the additional burden of the heavier taxes.

I think the wisest thing to do is to let the Big Three file bankruptcy followed by restructuring. We've done more for the Big Three than a lot smaller companies could ever hope for.

I think you missed most of the picture in the financial meltdown-the role of the derivatives market. There have been big letdowns in the housing markets many times before--read up on the S&L crisis in the 80's for an example of how things used to work with a little more regulation. More recently I recall similar housing market problems in 01/02 and 91/92 that didn't go nuts. The LTCM crisis in 1998 was more similar to this one. The principal recommendation in April 1999 after that crisis to "constrain excessive leverage" http://www.ustreas.gov/press/releases/reports/hedgfund.pdf appears to have remained unimplemented. The housing slump was just the small random shock that made the leveraged house of cards collapse. The main lessons to be learned have little to do with mortgage lending--it is a shame that once again the Bush administration did not act until after a disaster had occurred.

You don't have to trust me on this you can follow this link (http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom) from my previous post to a former Wall Street insider's view or this link to Warren Buffet's view (http://spectator.org/archives/2008/09/17/warren-buffett-told-you-so/1) presented in the conservative magazine The American Spectator. Both of those guys are more hands on in the market collapse than I am and their analysis rings pretty close to true to me.

To expect congress to manage our money well (it is our money before they take it) is, for the most part, naive.

To expect congress to manage our money well (it is our money before they take it) is, for the most part, naive.Good point, but I think Detroit has demonstrated they are also inept

Ok - here is a difference. Banks all over the world have gotten bailouts because we had/still have a huge systemic problem. Automakers all over the world are struggling - I am sure that there are some socialist governments who are helping their companies but by and large, auto companies from other countries are expected to ride out the storm. This shows the difference in this case is not so much worldwide systemic markets problems but mismanagement.

I am surprised here to read for support of the big three when we have been bashing them for years. Their inefficiencies, their shortsightedness etc. Remember Toyota sold the Prius when oil had never seen $50 a barrel and Honda has been adament about not having a V-8 engine.

And the Republican bashing is really simple minded in this article. Remember that all of Europe (who leans more left than the majority of Americans) bailed out their banks too. I don't think they were worried about Wall St. executives.

And another thing... Real estate prices are ridiculous on the other side of the pond too. The UK is dealing with their own bubble that is a bit worse than ours.

And another thing ... you can throw out all the other "real estate crises" you want ... but there has never been a nationwide downturn of this magnitude since the depression. The other "crises" were modest in comparison and even the S&L debacle cost taxpayers about $500 billion.

Lets face it. There are too many cars in the US - as people cut back, the easiest large purchase to put off is autos. There needs to be a true cutback in Detroit - if you start giving cash (or loaning it for free) then you will not get as big a cutback as you need. The dealer network is ridiculously bloated - I mean the waste of labor and real estate is incredible. The jobs bank - come on.

Count me in as a bank bailout supporter and a let the big 3 fail kind of person. It is not a double standard as they aren't the same things. And trust me, the wall street executives are getting crushed - so don't worry about the class nature of the differences.

... and Honda has been adament about not having a V-8 engine.

Well, they had.