Auto Bailout Funds Won’t Be Repaid. And That’s Not the Worst News

Posted September 14th, 2009 at 7.25pm in Enterprise and Free Markets.

Remember the auto bailout? It’s not in the front pages anymore, but last week the Congressional Oversight Panel — a body created by statute to oversee TARP spending — issued a comprehensive and critical report on Washington’s foray into Detroit.

The headline news, reported in most major media: the money won’t be paid back, not in full anyway. Even if the firms return to viability, taxpayers — said the panel — will likely never be able to recoup anywhere near all of the $77 billion or so they have put in them. That conclusion, however, was hardly surprising — most observers long ago wrote off hopes of taxpayers breaking even on the bailout deals.

Of more interest was the criticisms leveled by the bi-partisan panel — chaired by Elizabeth Warren of Harvard Law School — of the way the program was (and is) run. Among these: a failure to define the goals or critieria for the bailout, lack of transparency, and a lack of an exit strategy — leaving the question of when (if ever) the government will be selling its ownership stakes in GM and Chrysler. The report also questioned the government’s ability — as part-owner of these firms in a competitively-neutral hands-off manner, recommending that ownership be transferred to an independent trust.

The panel also provides the most comprehensive discussion to date of the legality of the bailouts. Since the law creating TARP limits funding to “financial institutions,” many (including some of us here) have argued that there was no legal basis to provide aid to the auto companies. Stopping just short of flatly declaring the whole affair illegal, the panel requested a legal opinion from the Treasury Department on the question.

Panel member Jeb Hensarling, a congressman from Texas, dissented from the report, arguing for a firmer statement on illegality, while pointing out the government’s abuses of the bankruptcy process and calling for an end to TARP itself.

The report, as well as the dissent, are essential reading for anyone who doubts the pitfalls inherent in government bailouts. The question is whether anyone will really listen.

Author: James Gattuso
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21 Comments

September 14, 2009 Bobbie Jay writes:

This is what happens when people and businesses put trust in government, when government shows a clear picture they are untrustworthy!

Obama is just waiting for that first big industry to collapse. All A SET-UP!

September 15, 2009 Grand Theat Auto Bailout: We’re Getting Screwed « JoHNBRoDiGaNDoTCoM writes:

[...] when I read things like this, you can imagine how warm and tingly it makes me feel. So sayeth the fair and balanced folks from [...]

September 15, 2009 Elephant Owners » Blog Archive » The Auto Bailout Quagmire writes:

[...] Read More… [...]

September 15, 2009 Patricia J. Read, Cape Coral, Florida 33914 writes:

The Obama cloud hangs over America.

I ask: how can one man get away with forcing these programs? I compare this new administration to The Perfect Storm.

Congress, the House and the media all on one side.

PJR

September 15, 2009 Bob, Portland, OR writes:

The Obamacorn’s will never give up control of GM and Chrysler because of the unions.

Watch out Ford…

September 15, 2009 Jeanne Stotler, woodbridge, Va writes:

We need a good Constitutional Lawyer that will file a suit against this administration for it’s flagrant abuse of power and anti Constituional actions. We need to take back OUR COUNTRY, and let these people KNOW that they WORK FOR US.

September 15, 2009 Ann,Goldsboro,NC writes:

We’ve always owned GM and Chrysler vehicles. You can believe I’ll never buy another for personal or business use. Fords or foreigns from now on.

September 15, 2009 Linda Carlsbad, CA writes:

China has their car company that the people have to support, we have ours! Why is no one filing a suit aganist this administration for TREASON?

September 15, 2009 John Winston Salem, NC writes:

I agree witht the writer at woodbridge, va.

September 15, 2009 Tom Iowa writes:

I have purchased over thirty GM units in the last 5 years. Needless to say, now that the government owns 60% of GM I will be buying my new units from Ford. Lets see Obama get his money back from that.

September 15, 2009 Bob Bartlett, Phoenix, AZ writes:

My greatest concern and question about Government Motors is whether or not they will be run like FANNIE MAY & FREDDIE MAC.

If so it will eliminate Ford!.

September 15, 2009 Harley Watkins, Palm Bay, FL writes:

C-O-R-U-P-T-I-O-N… See we typical American folks can spell… That is and has always been the issue. Forget the auto industry and TARP.

I wan a full scale investigation and audit of the amount of Gold we have left in the Reserve!!! A formal INDEPENDANT audit hasn’t happened in half a century.

My suspicion is that we as a nation have no reserve left…

Corruption as a whole must be erradicated in Washington… only then can this plague of madness end.

September 15, 2009 John Roane Sarasota, Florida writes:

No surprises here. But if we only get repaid in part don’t we still have stock holdings which can be sold at anytime? Where is our Community Organizer now? What does the Car Czar have to say?

September 15, 2009 Lynn B. DeSpain writes:

Every time that I see or hear a GM or Chrysler commercial, I shudder to think that I am paying for it. Every time I see a new GN or Chrysler product on the road, I see my tax dollars at work.
My family has always been and always will be a Ford family. I knew there had to be a reason!
Hozro

September 15, 2009 Bruce, Hillsboro Oregon writes:

Considering the money we wont get back lets not forget the 2 billion loan to petrobras and that george soros owns 816 million of it. when does this loan get repaid and why does the 7th largest oil company need it?

September 16, 2009 Kay, los angeles writes:

My favorite Ronald Reagan quotes:

“The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

“The most terrifying words in the English language are: I’m from the government and I’m here to help.”

“The problem is not that people are taxed too little, the problem is that government spends too much.”

September 16, 2009 R Morini New Hampshire writes:

My first car was a 59 Corvette, and one of my next was a 70 Road Runner. Now I drive a Subaru with a quarter million miles on her, and in the future will purchase another Subaru. That is unless we all end up jobless and have to ride the bus or walk.

September 16, 2009 Jerry from Chicago writes:

I can tell you that if I ran an American car company and saw foreign made cars in my factory parking lots, the owners of those cars would be the first ones I’d let go.

There are a lot of Americans who will puchase anything foreign made if they can get it cheaper than something made in America. Yet, these same people are the first to complain when they lose their jobs.

September 16, 2009 President Obama Doesn’t Want to Run the Auto Industry – But He Continues To Do It | Conservative Principles Now writes:

[...] in government aid that won’t be repaid according to a Congressional Oversight Panel report that was critical “of the way the program was (and is) run. Among these: a failure to define the goals or criteria [...]

September 19, 2009 Grassroots in Nebraska: In the News, September 11-18, 2009 | Grassroots in Nebraska writes:

[...] Auto Bailout Funds Won’t Be Repaid. And That’s Not the Worst News [...]

September 27, 2009 I’m Shocked! « 36 Chambers – The Legendary Journeys: Execution to the max! writes:

[...] Filed under: Curmudgeonliness — Kevin Feasel @ 4:02 pm The Government Motors bailout probably won’t be paid back. I thought this was a slam-dunk deal that was going to be a profit for the American taxpayer, [...]

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