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Micki Maynard · Mitt Romney’s Version of the Auto Bailout: Not Exactly How It Happened
November 10th, 2011
Rick Perry’s stumble in Wednesday night’s Republican presidential candidates debate caught a lot of attention inside the Beltway. But Mitt Romney’s characterization of the auto bailout has also touched nerves — especially because parts of it seem to be wrong.
Romney’s opposition to the bailout is well-known, and in fact, Republican candidates by and large think it was a bad idea.
Asked about the auto bailout during a discussion of the economy last night, Romney said, “Whether it was by President Bush or President Obama, it was the wrong way to go.”
He went on, “We have capital markets. It works in the U.S.”
In reality, banks had refused to provide Chrysler and General Motors with the kind of financing the companies would have needed to restructure. Congress also refused to approve a bailout package. That was why the government stepped in to finance and speed the companies through Chapter 11.
Ford, which did not seek federal assistance, had borrowed billions of dollars from financial institutions before the financial crisis. But it do so by mortgaging virtually the entire company, including its blue oval logo.
Later, in his comments, Romney said of the Obama administration, “They gave General Motors to the UAW, they gave Chrysler to Fiat.”
In reality, the U.S. and Canadian governments wound up as the largest shareholders in G.M,, and have since sold part of their stake, after G.M. went public last year. A health care trust fund for UAW members that is administered by the union gained a 17.5 percent stake in G.M., which has since declined to about 10 percent.
On Chrysler, Romney is closer to being right. Fiat, the Italian automaker, took management control of Chrysler as a result of the government-sponsored bankruptcy, and got a 20 percent stake without making an investment, once the company emerged from Chapter 11.
Fiat now owns the majority of Chrysler shares, for which it paid $1.8 million, including the government’s 6 percent stake in Chrysler.
Given his way, said Romney, “we would have had a private sector bailout, a private sector restructuring and bankruptcy, as opposed to what we had with government playing its heavy hand.”
Others might have felt the same way, but under the circumstances in 2009, Romney’s plan would not have come about.
Here’s how Romney looked in the debate last night.
VIDEO GOES HERE
