Gibbs Struggles To Contrast Auto, Wall Street Bailouts

Robert Gibbs had to know it was coming. The press briefing on Monday was sure to focus on an apparent double standard from the administration when it came to the auto industry and financial sector bailouts.

But when asked to explain the disparity -- such as GM's CEO Rick Wagoner being forced to step down while bank CEOs remain in their perches -- the Obama administration press secretary seemed to struggle for words.

Was there a double standard? Read Gibbs' answer for yourself:

"Understand that we have taken and are prepared to take extraordinary steps to help the auto industry get it back up on its feet, to put it on a firmer ground, and see it return to a stronger position, to support the companies, the workers and communities they are in," he replied. "I think if you look at, I think this question was asked over the course of the last 12 hours. The original agreements contemplated a March 31 deadline whereby you would either give additional assistance or call the loan. So what I think what the president and his task force are doing is taking the steps forward to help these companies. At the same time [we are] expecting a plan for viability in the future. I would also say that the decisions that are made on any entity receiving assistance is done in a way that we think will stabilize the economy, create jobs, in some cases it is to protect jobs, and have to a have manufacturing base, like with GM, Chrysler and others. It is to get lending moving again. But I think that this administration is rightly matching and balancing the notion for responsibility, at the same time understanding that we want to be a partner in ensuring strong and viable auto industries moving forward."

Say what?

Some members of the press in the room snickered. One reporter muttered under his breath: "that made absolutely no sense." Luckily for Gibbs, and those who wanted answers, he was given another bite of the apple. Responding to a question on the sacrifice that mid-westerners were being asked to make, he noted that Obama himself had traveled to those hard-hit towns and was acutely aware of their despair. Gibbs himself said he had spent the night before on the phone with Michigan Gov. Jennifer Granholm.

But his remarks still seemed defined by vagaries. Gibbs dismissed one question as "general and somewhat non-specific." But when asked later if he wanted questions about individual banks, he said he didn't have specifics. Pressed repeatedly to explain why Wagoner was told to go but bank CEOs were not -- or, for that matter, why labor contracts for auto-workers were reworked when it was deemed illegal to revamp bonus contracts for AIG execs -- he declared a "hesitancy" to "look at every entity the same way."

Earlier, when he was asked if Wagoner's departure would serve as a warning to the CEOs of bailed-out banks -- that poor performance with taxpayer funds could result in the loss of a job no matter the industry -- Gibbs refused to be nailed down once again.

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"I think it is imperative or important to ensure that we look at these things all individually," he said. "I think that it is safe for anyone to assume, and I don't mean just for CEOs, but obviously we've got, there are 300 million taxpayers who any of us owe it to be responsible with their money. We are going to do what needs to be done to ensure and protect their money and to use whatever we use wisely to get our economy moving, whether it is assistance to a bank that we hope will turn around and lend that money to a family or a small business, or whether that is in helping an icon like GM or Chrysler get back on its feet again."

In an interview with ABC News, House Financial Services Committee member Maxine Waters said Obama should "absolutely" force bank chiefs from their jobs.

"Absolutely, absolutely," Waters, (D-Calif.), said. "I think that they're in the same situation. Many of them are making huge salaries. They have stock options, they have bonuses, they have been responsible for predatory lending, sub-prime lending, they all made a lot of money, they were irresponsible in the way that they created this bubble, and they too deserve to be brought down, if necessary."

Watch:

Comments

[Rule Of Law]

Whenever a company goes into proper bankruptcy, all contracts are set aside and everything is renegotiated as part of the bankruptcy solution. If done correctly, a company is then able to emerge from bankruptcy stronger than it went in and able to continue on.

When Congress, or rather, Geithner offered any part of the bailout or stimulus package to any business, they maintained the right to impose whatever stipulations they felt necessary in order to make their plan work. If the companies-­-primarily banks and insurers--weren't asked to break contracts as the auto industry has, that that only means that someone in government decided not to. The next question should be, Why?

[iluvsam]

There really is no double standard with regard to the Union vs. AIG employment contracts. They really need to have more lawyer-journalists in the MSM so that they don't spew out information they don't seem to understand. And those who do have law degrees in the MSM seem to have gotten their degrees at "Bob & Jim's Law Barn". I can hear the school's mantra now, "Here at the Law Barn we stress law!"

It comes down to the nature of the contracts--Union negotiated vs. individually negotiated. Unions negotiate on behalf of all the autoworkers. ONE contract per company exists. In the case of the AIG contracts, there were 100s of individual employment contracts that had to be renegotiated. If both parties do not agree to renegotiate, the contract cannot be reneged on. The AIG employees were not willing participants. If AIG reneged, it opened itself up to 100s of lawsuits or arbitration proceedings from individual claimants. In addition they needed those people to unwind a very complicated financial structure.

If the automakers renege on the contracts, there is legal procedure where the Union can take the matter on behalf of all of the autoworkers. ONE claimant. There wouldn't be 100s of individual employee lawsuits.

This all should have been at the tip of Gibb's tongue.

[Renee27]

I guess you guys would rather keep throwing tax payer dollars at the car companies than to actually doing something proactive like restructuring the company, paying off their debts, and getting rid of incompetent CEOs.

I think its sad that some will lose their jobs, but many will keep their jobs during the restructuring as well.

I am sure the corporate MSM is going crazy over this since at least one major newspaper shares a corporate board with GM. I am no economist but in my view the President has made a good decision. I will wait and see what happens with the banks and insurance companies. Their situation is a lot more complex and in my view they must be handled differently because they are a much greater risk to our economy. And I have yet to hear any real concrete alternatives to the President plan.

[justsomeguywhocameby]

My thoughts exactly.

Go Mr. President.

[Rule Of Law]

It's not just a matter of how the auto makers were handled.

The real question is: Why have the banks and other financial monsters not been asked for the same concessions?

[sshaler]

Shockingly, it comes across as if Barack Obama and his economic team have ended up baiting the public by siding with the financial elites. What's the public who just elected Obama on his alleged populist credentials going to do now? Sad.

[vernonbc]

Shockingly, it comes across as if President Obama and his economic team has looked at each situation individually and assessed what needed to be done. Silly president. He should have just issued one edict from on high and have been done with it. Then what would all the pundits and commenters have to complain about.

[justsomeguywhocameby]

TELEPROMPTER, AIR FORCE ONE, OVEREXPOSED,...

[JonS]

The difference is elementary. Detroit makes things while Wall Street makes things up.

[Rule Of Law]

Nicely put! Marked as favorite.

[DonCosenza]

The problem is with the assumption that the two industries ought to be treated the same way by the administration.

Perhaps more Wall Street execs deserve to lose their job, but that should be argued based on the the specifics of that industry and the companies involved.

Just because a company in one industry might be allowed to go bankrupt or its CEO forced out does not mean that decision must be mirrored by the same actions in the other industry.

That being said, I would remind readers that Lehman Brothers was allowed to go bankrupt, and Willumstad was replaced by Liddy at AIG after the Fed took it over; so if it's symmetry you seek, these actions might represent that symmetry.

[sshaler]

You make a good argument but I think there's something to be added. There's a kind of awe Obama's displaying for the rich and famous that's clouding the picture. During the election campaign, Obama ridiculed John McCain for saying the fundamentals of the economy are sound and now he's saying it--in exactly the same language McCain got ridiculed for! (Not that I'd vote for either of them). One wonders if maybe Barack Obama is reluctant to be left out of the Wall Street club or is experiencing some kind of thrill because he's included in these lofty circles...?? At any rate, there's more than just the facts involved. Otherwise, President Obama would be taking all important arguments seriously, for example Krugman, Stiglitz et al, and giving them consideration. He's picked out a very narrowly focused team and that focus is saving big financial institutions as if we haven't lived perfectly well without them in the past.

[DonCosenza]

Since we're on the topic of flaws, I'll just point out a few things:

- Obama was already a millionaire before he entered the White House. Certainly not up there with the bailout CEOs, but still... as for awe for the famous? What's that based on, him having Stevie Wonder play at the White House? Really.

- I haven't heard Obama say the fundamentals of the economy are strong. I've heard him say that recovery is going to be tough and painful but that we'll make it. You'd rather him to tell the country that we're all f*cked? Only Nobel Prize-winning economists with columns in the NY Times have the luxury of doing that.

- Krugman and Stigilitz, for all their smarts and inputs, aren't the only economists out there. They have the benefit of not being held to account for their policy positions. I suspect Obama and those in his administration are consuming input from people smarter than you and I from all sides of the issues. Will they make the best judgements? Only time will tell that, but let us all refrain from a myopic view of the world.

[Eris23Skidoo]

And here I thought auto CEO's were rich and famous, too. Before dubya deregulated everything and destroyed our economy I never knew the name of a single Wall St CEO, but I do remember seeing books written by Lee Iacocca.

[madusher]

I'm probably one of Obama's biggest supporters and I've stood up against this administrations detractors to the hilt, but I just don't understand this. It's not like these car companies bad decisions put our economy in a 21st century depression. Why are we holding them to a completely different standard? Heads need to roll at GM,Ford, and Chrysler for years of horrible decisions that have placed short term profits ahead of long term viability. But that kind of accountability should have started with these banks that were "too large to fail". I'm afraid that Obama wants to look tough in terms of fiscal accountablilty but is afraid to go after Wall Street. That just looks weak, pathetic, and hypocritical. It pains me to say that about the man I worked so hard to get elected.

[sshaler]

I think you're right. There's definitely some element like fear or awe for the elites involved. There's a lack of transparency (see Mr. Gibb's press conference today) and an unwillingness to consider the opinions of dissenting economists. To reassure the public, President Obama should at least clear out the architects of the financial crisis and stop using them as his top advisors. At the very least explain to the public in detail why he's so impressed by them and why he brushes off dissenting advice without a public hearing.

[justsomeguywhocameby]

Ford is doing just fine, Thank you very much.

[Rule Of Law]

JFK threatened to do two things shortly before he died. One, was end the FED. Two, was end the war. He'd already printed silver certificates, not Federal Reserve notes and earned exactly the wrong enemies to have.

Do you really think that Obama--without an entire posse of his own all believing the same thing so his back would be covered--would take on the Wall Street mob, knowing history?

Here's a hint: President Johnson's first official act while on the plane back to DC was to sign a law countermanding JFK's regarding the Federal Reserve. Everyone thinks of bankers as pasty little men in bow ties. They're not. They're predators.

[BMurph]

Of course there's a difference between Detroit and Wall Street. The world economy doesn't depend on whether GM and Chrysler survive or not. If Wall Street goes under, we're all doomed.

To suggest anything else is a failure to acknowledge reality. Maxine Waters and the rest of Congress have already demonstrated their facility for playing to and feeding populist rage, no matter how much damage they can potentially cause or how hypocritical it is for them to do so, considering the role Congress has played in allowing the bank bailout to be constructed the way it is.

At least the Obama administration is exercising real leadership. Wagoner submitted a plan that was based on getting away with few real changes, like not substantially cutting costs or increasing mpg per vehicle, etc., and expected the government just to go along with whatever Detroit wanted like they always have done. So they kicked him out, and deservedly so.

The president deserves a lot of credit for taking a stand. I believe that Wall Street is going to get the underlying message here - that the days of free government money you don't have to be accountable for is over. Let Congress do the right thing now and attach some strings to any further bailout money going to the finance industry. That is what all this is about. Accountability. It's about time.

[sshaler]

We're all doomed already because of Wall Street. It's an unnecessary, parasitic, voracious organism without which we lived for centuries. The vivid picture of what Wall Street has done to people, both in destroying moral fibre and in exploiting naivite, invigorates one to create new institutions that serve people rather than sponge off of them; ones that inspire honour and maturity.

[BMurph]

New institutions? Like what, for instance? If you have a better idea of how to provide a marketplace for the economy other than stock and commodity exchanges, I'm sure we'd all love to hear it.

As it is, we have what we have, and we're all tied to it one way or another. FDR understood that and worked to modify it by imposing regulations on the financial industry. It all worked pretty well until the free-market zealots and their friends in Congress got those protections repealed in the 1990's. We need to get back to not only strict regulation of the markets but also back to trust busting. No company should ever be too big to fail, ever again.

[Eris23Skidoo]

YES!!!!

[Rule Of Law]

You ream Wagoner's plan, and perhaps, without having seen it myself, rightly so.

The question you avoid is, where is Wall Street's plan? I haven't seen one. I've seen Geithner's, Paulson's and Summer's plan. But nothing from the bankers. OH, they went to Congress, and shifted the blame and look chastened, then went out and spent money on bonuses, salaries, jets, and parties--oh, and the occasional purchase of a distressed bank or two. They never took the blame. They never accepted accountability. They never offered their resignations. And here's the really stunning part--No one on Obama's team asked for them! They invited them to the white house to give their input on how to get out of the mess they created instead.

And their solution for the toxic assets ends up being one that puts the American Taxpayer n the hook for 93 cents out of every dollar of securities that gets sold off their books. Such a deal! Why are we not surprised?

[vontrapp]

This is Obama's blindspot. This blindspot allowing bankers to burn and loot our economy, and refusing to hold them to the same standard as everyon else.

It may well come to overshadow everything else good he may do, and come to define his presidency. The Wall Street president. It will be sad. I enthusiatically supported Obama. But if he doesn't hold the bankers and traders and ceos of Wall Street accountable, and gives away trillions of taxpayer dollars to bail them out of their own bad decisions, I will be happy to see him go in 2012.

He will not have delivered on the most important aspect of "change" that he promised. Changing the attitude and operation of Wall Street that continues to privatize the gains and socialize the losses.

The biggest threat to our long-term properity are Wall Street bankers and traders running rampant, and the executive branch in their pocket. And that appears to be where we are at, at this moment, with Obama in the thrall of Wall Street insiders like Geithner and Summers.

[Jonni Rae]

It is hypocritical at the very least. I am disappointed in him. He will have to answer those questions presented to Gibbs. Maybe he needs to come face to face with his own Ivy League bias, and I mean no disrespect, I supported him and still do, big time. But this IS an issue he must address. If he came in to help the middle class, the working Americans,then he needs to explain how this is helping them. And end the perception that he is friend of Wall Street, "one of the club." It's definitely out there. I don't like his going to Europe on the verge of announcing it, either. Seems inconsiderate and dismissive of all those workers he came to Washington to represent.

[lynettema]

I don't think this whole "bail out" scenario is a done deal. Apparently the auto industry didn't come up with the plans they had promised. So the administration stepped in and began helping with those plans. This was on the auto industry asking for more money. The banks will be asking for more as well. It will be interesting to see what happens then. I agree with you all on one level. I think somebody should have fired those schmucks. It is the share holders job, I think. What is wrong with that picture.

[lizr]

very very sad to see the double std from Obama.. I still hope he'll redeem himself..

[Eris23Skidoo]

Geithner is following Obama's orders, not the other way around. I'll bet part of the reason for this "double standard" is that last fall, congress authorized x amount of dollars to be spent keeping the financial system intact. Obama inherited some of that money because Bush only spent about half of it. Being that congress has the power of the purse, more money would need to be appropriated in order for Obama to send more cash to Detroit. If congress wants to save GM & Chrysler whether or not they reform themselves they have the power of the purse and they can enact a law that would bail them out further.

[HappyMarsden]

FACT: Obama and admin have all along treated the car companies/UAW differently than they treated Wall St. CEO's. Apparently, GM/Chrysler/etc are NOT "TOO BIG TO FAIL". AIG and friends ARE too big to fail. Gee, I wonder if this has anything to do with all the Wall St. lobbyists Obama has been linked to?

For the people who are now saying (and realizing) that BOTH parties are the same, just wh.ores for the lobbyist pimps who donate to their campaigns... guess what, homies?

RALPH NADER ALREADY WARNED YOU ABOUT THIS. But you didn't listen to him. You didn't vote for him. Now you're screwed, and screwed GOOD. Just like you were under Bush! Except this time, it'll be your children and your children's children and your children's children's chil.....

[sshaler]

I listened to Ralph Nader and heard the voice of truth and reason. I can never understand why the people of the US don't elect someone with proven credentials like Ralph Nader. He's done more for consumer protection than anyone else in US history and he speaks his mind to anyone, without regard for donations of money. What more could you want?

[HappyMarsden]

Someone who "looks" more presidential. It's a testament to the stupidity of Americans that Nader was not elected, over Obama. Thus, Wall St. and corporate lobbyists continue to rule over the nation.

[HappyMarsden]

You know what I say? WORKFARE, not welfare! Rule that the companies getting billions of dollars in corporate welfare WORK for their billions. You know, just like non-corporate welfare-collecting citizens have to.

[Demokrapp]

does anyone have new news on ashley's snorting?????

[justsomeguywhocameby]

SNORT !

[Demokrapp]

i dont think this financial plan for the banks is going to work. i think we will get our money back but i dont think it will encourage lending bc people simply dont want to borrow. money is now available if u want to borrow but i dont know personally a soul who wants to borrow now. most want to pay down their loans if they have any. or they are rich like me but like me just dont want to buy more "things".

[lynettema]

I think these huge banks and insurance companies should be broken up like any other monopoly.

[Eris23Skidoo]

Agreed. But I want the immediate crisis fixed first. They are WAY too big and they're only that big because they got deregulated. NO company should EVER be allowed to become "too big to fail" ever again. We can see that these huge corpse are definitely fallible, its just that if they fall they'll take down everything within sight at the same time. So I say we fix 'em and then dice 'em up and bust those trusts!

[sabrina105]

This entire episode in our history will not be near completion until at least some of the back door looters at Goldman-Sachs/AIG are brought to justice and the money hunted down and returned to the taxpayers, wherever it happens to be"deposited".

Another aspect of globalization - now the financial/ruling class has an entire planet full of angry workers and taxpayers. We've simultaneously come to the now obvious realization, that we've been lied to for decades and by the designs of a very few wealthy and powerful individuals with the ability to game the system in their favor (formerly known as our system of government) at every opportunity.

We and Detroit are all victims of a corrupt and completely self-serving private banking/financial system. We should now insist that our government be be the only lender. The government (We) are the only lenders we can really trust now.

[altlic]

Well said, up to the last paragraph, which is nuts.

[Carolab]

The last paragraph is exactly on target. We need a new monetary system -- credit as a public utility is the only solution.

[bajamary]

The Federal Reserve is a not our "buddy" and I've read that Geithner's plan to regulate the financial banks, etc will be the purview of the Federal Reserve.

Not a good idea, poeple.

I just started to read "Secrets of the Temple" by William Greider. He was on Bill Moyers' show last week.

criticizes the Obama administration's bank bailout plan in a recent article for THE NATION, likening it to a game of Monopoly just for Wall Street:

"It's very much like the regular Monopoly game that kids play--only better--because this one uses real money, provided courtesy of the taxpayers. The best thing about Obama's game is nobody loses. Usually, the winner in Monopoly is the one who winds up with the most money. In the Obama version, the losers get any losses back from the government at the end of the game."

Greider doesn't believe change is going to originate in Washington or that the Obama administration will make the right changes alone. In the final chapter of his book, Greider lays out the case that real democratic change must start with people organizing themselves and forcing change up from the grassroots.

You can watch it free online at:

http://www.pbs.org/moyers/journal/03272009/profile.html

[Didderbops]

Meet the new boss, same as the old boss. The super rich and greedy get help from Obama, and hard working people get thrown under a bus. Obama is starting to look like the Bush administration with a new face. Same plutocrats running things, with a dollop or two of populism to help the BS go down easier.

[PigsCantFly]

I agree totally. Watching Robert Gibbs try talk absolute garbage should make it clear to anyone.
The time to give Obama a chance to make real change is over. He hasn't done it, and it's clear he's not interested in doing so.

So it turns out Nader was right, whodathunkit?

[Eris23Skidoo]

And the CEO of GM isn't rich and greedy?