General Motors Lines Up for Federal Bailout
GMAC, the finance arm of General Motors, is seeking status a bank holding company, thus allowing it access to government funds in the recently passed $700 billion bank bailout. Although not as an egregious move as allowing Goldman Sachs and Morgan Stanley bank holding status (covered amusingly in this Daily Kos diary), it still is a fairly rank move of chicanery to allow GM to get their mitts on our money.
This move is ostensibly to buy Chrysler, but don’t be fooled, very soon GM will draw funds for its own survival, as will Ford. Not only are Ford and GM too big to fail, they’re also cultural icons employing hundreds of thousands, unlike the big finance companies. There’s no way to let them fail after the precedent of what happened on Wall St.
Bailing out automotive companies in theory could be a good thing, but the US government is caught in the worst of two philosophical worlds, not believing in bailing out capitalism but forced to do it anyway, so it performs the evolution poorly and with half measures.
For instance, if all goes through for GM and Chrysler the government will hand over a huge chunk of cash with no safeguards or controls. There’s nothing to stop Uncle Sam from dictating to GM that all new Chrysler cars be plug-in hybrids by 2012 if they want US cash. Or a fuel efficiency standard of 50 mpg. Or executive compensation controls, or any number of proposals that could positively effect a wide range of policy goals.
Market interference! Give us the money to survive short-term and allow us to continue all the stupid business practices that got us into such trouble in the first place. That’s exactly what’s going on now and it will not work, eventually Ford and GM will go under if they don’t drastically change.
Taxpayers at this point can only sit back helplessly and watch. Federal officials pulling these deals together are accountable to no one but the firms they’re bailing out, and the only possibility of replacing them might occur next January. Lord knows that day can’t come soon enough.