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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.
TRANSCRIPT
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.
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11 Responses to Rattner: Under Romney’s Plan, US Auto Makers Would Have Died
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Glenn Iverson
Oct. 23rd, 2012 at 10:27 pm
I hate to say this, but CNN (no, not Fox) said in their fact checking that Romney DID mention bankruptcy with government guarantees, NOT just private funding, and Romney’s plan would have cost much less. In addition, most of GM’s manufacturing and assembly are done outside of the U.S., so the American portion of the corporation would have been just fine making payroll. Chrysler may have been in worse trouble because more of their manufacturing is done in the U.S. than GM’s; but again, I believe Romney’s plan would have been sufficient. On a somewhat related note, I see that Chevy is still losing over $40,000 on every Volt sold, which is a horrible business practice for a company trying to recover from bankruptcy; maybe that’s proof that perhaps GM *SHOULD* have sold off some of their assets during restructuring.
Tom
Oct. 23rd, 2012 at 10:35 pm
are you just pretending not to get it? He offered govt funding if they got thru the first part on their own which they could not have done. Rattner explained it all to you in simple language.
Shiva (Moderator)
Oct. 23rd, 2012 at 10:41 pm
Romney never mentioned they would never get the funding from banks. He may have said it, but it was meaningless. Under Romney GM and Chrysler would be gone and you would be pleased as punch
GoGirl
Oct. 23rd, 2012 at 11:44 pm
I’ll let Mitt Romney explain to you what he meant. This is from 2008.
“There’s no question but that if you just write a check that you’re going to see these companies go out of business ultimately.”
Paws
Oct. 24th, 2012 at 7:02 am
GoGirl – Great quote – that says it all.
Paws
Oct. 24th, 2012 at 7:01 am
It’s not just the car companies themselves that would have closed their doors. Think of all their suppliers here in the U.S. Without the business of the car companies, a lot of these suppliers would have closed their doors, too. This would have had major ripple effects throughout the economy and would have been absolutely devastating.
Romney is being quite disingenuous about his position on this and the effects of that position.
SinghX
Oct. 24th, 2012 at 7:43 am
“…Think of all their suppliers here in the U.S. Without the business of the car companies, a lot of these suppliers would have closed their doors, too…”
Exactly. Now replace the word “car” with “housing industry”; read and weep. Once the mortgage mess started the domino’s tumbled…
Antidote: I was at a party with a bunch of clients who were attached in various ways to housing (mortgage brokers and company, Realtors,contractors, suppliers, interior decorators, temp work agencies)before the crash and, one of them tapped their cigar and said, “Why, Bush wouldn’t DARE to touch OUR industry and bring US down; the economy would collapse!”
She was our of work for almost 2 years in the aftermath and almost lost everything…as well as the others. I lost a lot of my business because they lost theirs even though my work isn’t directly related.
And Romney has nothing but to repeat the performance of Bush and will run us all off the rails permanently…just like an out of control addict who destroys a family for generations.
It’s that simple.
DwightLD
Oct. 24th, 2012 at 4:18 pm
first – government guarantees are just that – guarantees that the government will pick up the tab if the deal goes south -privatize gains and socialize losses once again.
Second – the only other entity with that much cash at the time would have been China or chinese companies with government help. Consider that for GM the initials wouldn’t change – Geely Motors – has a nice ring to it doesn’t it?
Chris
Oct. 24th, 2012 at 11:38 pm
No Dwight. Romney said this: “The federal government should provide guarantees for post-bankruptcy financing.”
Do you get it now? He wanted to have them use a bankruptcy. They would have never gotten out of Chapter 7. Public financing was not available to get THROUGH to post-bankruptcy. They would’ve failed.
This too.
“There’s no question but that if you just write a check that you’re going to see these companies go out of business ultimately.”
Jena Isle
Oct. 26th, 2012 at 4:42 pm
I would have the car companies get help from the government. The government has to see to it that private businesses could also avail of help in case they need it.
These car companies are institutions, and allowing them to go bankrupt would not only mean people losing their jobs, but also allowing icons of stability go down the drain.
The result would not only negatively affect the financial aspect, but also the psychological environment of the community in which it exists in.
Jena Isle
Oct. 26th, 2012 at 4:55 pm
By the way, I came from Blog Engage and saw your link from there.
I am wondering if you could present a tabulated form on the platforms of both presidential candidates. I won’t be able to vote because I’m from another country, but I’m just interested to know their comprehensive stand. There are still several relatives in the US, who would surely be interested.
Have a good day.