Romney's Whoppers About The Auto Bailout
Former Massachusetts Governor tries to demonize auto bailout in Michigan debate
"Barack Obama gave GM to UAW, he gave Chrysler to Fiat," said Romney, the Michigan-born former Governor of Massachusetts.
Romney's statement was a whopper of an over-simplification, bordering on fabrication.
A trust owned by the United Auto Workers received a 17.5 percent ownership stake in GM to help that trust pay for its retirees' health care. That stake has declined since then, after the company went public in November 2010. The trust now owns about 10 percent of General Motors. That's much smaller than the government's remaining stake of about 26% and it doesn't support the notion that the government "gave" the company to the union.
Moreover, the union did not get free reign in return for its share. It was barred from going on strike over wage issues during recent contract talks with GM and Chrysler, as a condition of the bailouts.
Nor did Obama give Chrysler to Fiat.
The Italian automaker Fiat received an initial 20 percent stake in Chrysler as Chrysler emerged from bankruptcy in 2009 in exchange for only management expertise and technology. Since then, Fiat has paid $1.8 billion to boost its stake to 53.3 percent, including a $500 million payment to the U.S. Treasury to purchase the government's 6 percent share of the company.
According to Michigan Democratic party strategist Debbie Dingell, the popularity of the auto bailout in 2008-09 is controversial even in Michigan where conservative voters are ideologically opposed to the bailout on principal, while labor and most auto industry executives are for it. She has described the atmosphere in Michigan as "50-50," meaning only half the state's residents seem to think the bailout was a good idea.
Indeed, when former Utah governor Jon Huntsman agreed with Romney on the auto industry bailout being a wrong function of government, the mostly Republican crowd at Oakland University, just a few miles from Chrysler headquarters, erupted in applause and cheers.
GM CEO Dan Akerson, for example, a self-described Republican and critic of the Obama Administration's handling of the economy, has stated that he thinks bailing out the auto industry was the right thing to do. Akerson assumed his position as part of the Obama restructuring of GM.
Leading Republicans have argued that GM and Chrysler should have been allowed to drift into bankruptcy on a natural course, and that the government should have, at best, provided federal loan guarantees to private investors that would have financed the companies' bankruptcies.
"The problem with that argument is that there wasn't between $50 billion and $100 billion available in the private capital markets in late 2008 and early 2009 when the decisions had to be made about saving these two companies," says AOL Autos Editor-in-Chief David Kiley. "About the only potential sources of that kind of money when the financial sector was melting down was sovereign wealth funds, and the White House made a decision that it was a bad idea to provide government guarantees to foreign governments to acquire the U.S. auto industry, let alone allow GM, Chrysler and potentially Ford to liquidate to an assortment of investors."
Contributing: Calvin Woodward and Christopher Rugaber of The Huffington Post, and the Associated Press.
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