In the wake of the big Fannie, Freddie bail out, announced Sunday, you would think that few companies would want to jump on the bandwagon. You’d be wrong.
Now, this is a big political football. The big three employ hundreds of thousands of workers, mostly union workers. Not giving them the money means a lot of these people will get laid off. Giving them the money means that the douchenozzles at the top, who have been bleeding the company dry for years, will derive benefit from their incompetence. Honestly, I don’t want to see either thing happen, but I don’t have much faith in Congress’ ability to hold GM, Ford, and Chrysler accountable.
In all honesty, this is the perfect time for the big three to punt, politically. We’re 2 months from an election. It’s a Presidential election. If it comes up before the election and fails we will hear, “Democrats hate business” followed by one of the largest layoffs in US history. If it succeeds before the election we’ll hear from “The Maverick” that it’s the same old Washington politics, even though his policy would be to do the same. If it gets tabled, we’ll see a slowly increasing tide of layoff announcements from now until November followed by a chorus of “Why won’t Washington help you?”.
My sense is that it will pass with 80% support.
There is one thing that differentiates this from what’s going on at Fannie and Freddie…this is a loan, not a gift. It’s a gifty loan for sure, but it’s still a loan.
Ultimately, I don’t know where I stand on this particular bailout. I’m very much against the “Privatize Profit, Socialize Losses” crowd we have in DC, though I know it’s more complicated than that, now that we’ve created the regulatory equivalent of the Wild Wild West in our financial markets. On the flip side, I’d like to see these folks have some criminal accountability for playing fast and loose with sensible decision-making. Unfortunately, the big three bailout ain’t that. They’ve made one bad decision after another, don’t get me wrong, but bad decisions and criminal mischief, or outright fraud, are two different things.
We’ll see what Congress has to say about all this. My hope would be that McCain would oppose it, and Bush would Veto it, but I’m sure they’ve coordinated this much better than that. Nope, we’ll have some hearings and call the CEO’s of the big three in and slap their hands, then hand them the cash and pretend like something happened. That will be that, and we’ll still probably see massive layoffs.
The key to this is how the money is offered. Will the money come with any strings or not? If it’s just free money, it’s like give a fifth of vodka to a drunk and asking them to not drink it. If it comes with strings, they’ll whine and figure out ways to avoid whatever regulation imposed. That’s the culture of George W. Bush’s America.