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Rattner: Under Romney’s Plan, US Auto Makers Would Have Died
On MSNBC this evening, Steve Rattner, former US Treasury Auto Adviser who oversaw the President’s auto rescue, said that if Mitt Romney had his way General Motors and Chrysler “would have died.” So when Romney says his plan was the same as the President’s as he did in last night’s debate, he’s leaving out the little detail of the end result.
MATTHEWS: Romney’s New York Times op-ed headline, “let Detroit go bankrupt,” is often cited as evidence he would have let the auto industry fail. In fairness, Romney didn’t select the headline. But within Romney’s column is evidence he would have withheld federal money from the auto industry when it was needed. Romney wrote there, “a managed bankruptcy may be the only path to the fundamental reconstruction the industry needs. It would permit the companies to shed excess labor, pension and real estate cost. The federal government should provide guarantees for post-bankruptcy financing.” Well, Steve Rattner, you’re the expert. Chris, get in here in a minute. It seems to me if I wanted to borrow a sum of money from somebody to stay alive as a company ad I would remember who turned me down. And if they came along a couple of years later and said, of course I was going to give you the money, I was going to give you guarantees. But unless nobody was giving you the money what are you guaranteeing? It doesn’t make any sense, but he thinks he got away with it last night, Romney.
RATTNER: I think the President said it exactly right. The fact is that under the Romney plan the companies would have gone into bankruptcy without any government help, but they would have never come out because there was no private financing to help them during this period. The reason President Bush gave them money was because they had no money. They had run out of money. They literally were on the verge of closing their doors, laying off their workers and liquidating.
MATTHEWS: And so bankruptcy means bankruptcy. He makes it sound like it’s managed bankruptcy. It’s not really what we think of as Chapter 11.
RATTNER: There’s a lot of different kinds of bankruptcy. There’s what we did, which was a special kind of bankruptcy that was a quick bankruptcy that we did within 30 to 60 days. Romney would have put them into a regular Chapter 11, would have led to something we call Chapter 7 which is liquidation because nobody was going to finance these companies while they were in bankruptcy.
MATTHEWS: Can you say as a car expert and as well as a financial expert that if Obama hadn’t taken the extraordinary step of going in and lending the $80 billion or whatever it was, that they would have died? GM and Chrysler would have died?
RATTNER: GM and Chrysler, absolutely, there’s no question about it. They were literally running out of money. They did not have money to make their payroll, they didn’t have money to pay their electric bills, they didn’t have money to pay their suppliers. They would have closed their doors and liquidated.
Rattner is correct (details and factchecks here), because at the time of the auto rescue, credit was frozen. Without the government being willing to loan money, the auto makers would have had to liquidate.
Mitt Romney keeps lying about his plan being the same as the President’s but it was not the same. All bankruptcies are not the same. Under Mitt Romney’s plan, the US auto makers would have had to liquidate and they would be dead now. Mitt Romney knows that he can’t win Ohio if they know the truth about his auto bailout plan, that’s why he refuses to be honest about it now.