Detroit Bailout -- Let ExxonMobil Foot the Bill

Listening to the auto execs this week, hat in hand testifying in front of Congress, you'd think it would have offered a humble moment for them to come clean and own up to their mistakes. But no, they continue to deny any responsibility for the mess they are in. Instead (oh how convenient) they blamed their problems on the current collapse of the economy! That denial alone should exempt them from any "bridge loan."

The best idea I've heard in the last few days comes from an unlikely source, the actor Ashton Kutcher on the Bill Maher show, who repeated the suggestion that the auto industry go meet with the oil industry - their partner in crime - and ask them for a bailout. At least we know ExxonMobil can afford it.

And while we're on the subject, the one piece of good news today is that John Dingell may finally be on his way out as head of the House Energy and Commerce Committee. He had what, like 30 years to get this right? And all he did, over and over again, was enable Detroit to do nothing. It's time to let Henry Waxman assume this important role, particularly since global warming and energy will be the central focus of the committee's upcoming agenda. We can't afford to let Dingell's brand of obstruction stand in the way of real progress any longer.

Comments

[ObjectiveRealist]

Yes, but they're at a bit of a disadvantage because they can't call the Congress to a hearing. If they could, I imagine they'd ask why they voted for certain legislation that inflated housing and commodities markets then collapsed them, devastating general liquidity and credit.

Some bad business decisions by GM and Ford harmed their own profits, but Congress *killed* the credit market for them, for all of us really, but it's auto manufacturers that are the focus right now. Anyway, Congress pretended to resent bailing out banks, barely let out a peep when the banks cheated http://blogs.wsj.com/deals/2008/11/14/treasury-messed-up-the-bailout-lets-give-it-more-powers//], but they're about to play chicken over 1/28th as much money, while 1 million to 3 million jobs depend directly on Ford, GM and Chrysler.

[
There are mergers that should take place to improve systemic stability and encourage lending–for a very weak institution, a merger may be the right way to go. But what should not be endorsed is giving away government money so that it can be used to gobble up competitors that will not have any impact on the overall stability of the financial sector.
]

[iamapilgrim]

The oil companies and the auto manufacturers have sent their minions into Washington, DC hand-in-hand for decades to oppose each and every attempt to force the "Big Three" by Congress after Congress to (1) increase gas mileage, (2) downsize the cars that "Detroit" made and marketed and (3) coincidentally produce safer cars that have been obviously needed for over thirty years. The auto makers didn't want to "retool" and the the oil companies love gas guzzling vehicles. Ms. David's suggestion (actually repetition) of the suggestion that Big Oil bail out the automakers is as obviously true as it is completely unlikely.

The collusion of Big Oil interests and the American auto making industry is a well-known 'secret'.

Is there any among us that actually believes that an industry, i.e. oil producers and sellers, which has systematically raped and pillaged our nation since the early 1970's with threats, lies and manipulation of the oil supply for profit is inclined to help? If so, please contact me. I have a slightly used bridge that I can left them have at a "right" price.

This is akin to expecting real help from PhRMA on making their pharmaceuticals available to Americans for anywhere near the price that they are sold to every nation on the planet except the U.S.

[mjt218]

And whose fault is it that gas mileage standards weren't increased? Do Lobbyists make the laws?

[newpotusplease]

exactly, 25 billion is profit for one quarter --for one oil company--

go get it from them!!!!!!!!!!!!!

they were the ones happy to have you guys making hummers

[MIKEinNYC]

After watching the car company CEO's I got the feeling that I had just seen the 3 Stooges.

[MIKEinNYC]

Are we going to let the government run the car companies? When was the last time these elected dolts got anything right? Which one of them is the expert on the auto industry? Is there a car guy in the bunch?

At best, the government might set or suggest policy, like conservation. Who can argue with that?

As far as designing cars is concerned, leave that to the car guys. The problem at our car companies is that the guys who run them are not car guys. Mulally came from Boeing, Nardelli from Home Depot (LOL), and Wagoner, while he has had a long career at GM, was a finance guy.

Breaking up GM is not an answer. If you did that what are you going to have? 8 different car companies who each make their own engines, transmissions, and other components? A tad redundant, wouldn't you say? Do the geniuses who suggest this also suggest that we break Toyota up into Scion, Toyota and Lexus?

[JustMyWords]

No need to break up Toyota. THEIR execs seem to be managing to run things without crying for a government bail-out.

[Grit]

All of these bloated corporations need to be busted up into their component parts. As was done to Ma Bell many years ago. First off all of the blue blood executives at the top should be fired for being complete failures, their golden parachutes and retirements and stock options etc should be liquidated to help the companies out of their mess. One of the big problems with all this is the bloated mega companies have become so big the impact of their failing far outstrips their worth. If they had never been allowed to become so big their going bankrupt would not be so traumatic . If GM didn't exist if it was just Buick, Chevy, Pontiac, etc as separate companies and one failed. Too bad The competition might be a really good thing also. Maybe all the dinosaurs should be busted up like AIG, Bank America, all the car companies. Maybe that's why the American car companies make such big bloated vehicles. They are big bloated, and the people who run them have big bloated greed.

[karinova]

My mouth LITERALLY fell open when I heard Ashton Kutcher say this.
With that one sentence he finally justified his existence as far as I'm concerned.
He is absolutely right.

[geezer33]

Wonderful comments here. But isn't this how capitalism is supposed to work? Company management makes a significant number of poor decisions and the enterprise either closes or gets judicial protection in order to restructure for another chance at success. Chapter 11 is the logical route to go under current conditions in this country. This whole thing seems suureal, though; the entire global economy is depressed, but none of the non-US companies are pleading for a governmental handout, and it doesn't take a genius to see why. If I were a CEO at GM/Ford/Chrysler, I would not be in DC pleading for money; I would be begging Congress to pass legislation enabling tax supported medical and retirement benefits at least equivalent to those available in the EU, Japan and Korea. That, along with a healthy dose of green thinking from Henry Waxman, should make for a healthy US auto industry.

[filmzilla]

i do agree. Why should we the tax payers bail out the big three? does the big three bail us out by making more fuel efficient cars? give any of us jobs, a certain few but not enough for every tax paying tom, dick and harry to prop their fat lazy corporate ass. NO MORE CORPORATE WELFARE.

[Herkybird]

As elated as we all were to see Obama win the election the reality very quickly sets in and we all
say..."gla­d its not me" when it comes to deciding what to do about the economy. Why is it that you all say "no more corporate welfare" today while in the 3 years following the invasion of Iraq
you said nothing when Haliburton's stock rose from under $20 a share to over $66 a share. And what my friends do we have to show for that? How about 2,500 dead US Soldiers. Why should we as taxpayers have to bail out Haliburton/KBM??? Bailing out the big 3 US automakers when done the right way could save our economy and jobs totaling up to 7-9 million It is too late to bail out Haliburton. It won't bring back the 4,201 soldiers who died or heal the 30,794 who have been wounded. Now do you a more REALISTIC understanding of what is going on??

[courageunderfire]

Well, first out of the gate, we need a to raise the gas tax. Especially now that gas prices are dropping.

It would be great for the OBESE oil companies to bail out the auto makers. Or Maybe we need to have a huge list of To Do's for the auto industry, comply with XYZ and then we can talk about funds for your growth.
There still is a part of me that wants them to restructure their own mess.
Figure it out CEO's. You can start by putting an end to your fat cat bonuses.
It is a little hard to take having to hear people talk about socialism and welfare for the poor, when CORPORATE WELFARE is everywhere we turn these days.
Let the poor go hungry, but bail out the big fat cats on Wallstreet and auto makers?

[legalclubs]

Why would Big Oil want to pay to bail out the Big 3. It's not like we're going to stop driving cars even if all three cease to exist. Toyota, Honda, Mercedes, BMW, and every other foreign car maker are not near bankruptcy, so Americans will still have cars and burn oil (at least until the green tech improves).

So I guess the next possiblity is, would it even be legal for the government to force Big Oil to pay for the Big 3 bailout. Directly it would be a government taking and entitle Big Oil to FMV -- so it can't be done directly. It could be done indirectly, however, now that gas prices are back below $2, instead of the $4, you can expect those big profits to vanish. Also, you have to measure profit against the investment by the company, not just simple dollars. For example, somone who invests $100 and receives a $50 profit ohas made a 50% profit on their investment Whereas someone who invests $1000 dollars and makes $100 profit is only making a 10% profit. Big oils profit raw figures a very high, but that's because their investment is very high. In fact, their traditional profit percentage is fairly middle of the road compared to other major industries. For example, High Tech has a much higher profit ratio.

[ThereIsNoSanctuary]

What I don't get is how GM whines that it would be "too hard" for them to build fuel-efficient vehicles that Americans want to buy. As an example, this vehicle from GM's Opel division in Europe looks like it would be a lot of fun to drive, especially in "spearmint silver," and it gets 61.4 mpg with a regular gas engine (no hybrid):

http://www.vauxhall.co.uk/vaux/vehicle/vehicleBrandAction.do?method=viewBrand&brandCode=9K

Why in the world can't we have cars like this here? And I don't buy the old whine about how it would take too much to make their bumpers compliant with US safety standards.

[tom12010]

Absolutely!!

Big Oil MUST pay for exploiting the American public with its obscenely high profits.

[MIKEinNYC]

The Prius is OK but it's no fun, (except at the gas pump where you can LOL). We do not have to go to that extreme. If people who did not need a truck or an SUV drove normal cars that got between 18 and around 30 mpg, none of this would have ever happened. Plus, normal cars perform better.

We need to impose a meaningful tax on gas guzzlers, including trucks and SUV. Those who really do need a truck or SUV for one good reason or another get to claim tax refunds for the sums so expended when they file their income tax returns. Those whose vehicles exceed a certain rating should get to claim tax credits.

There's nothing wrong with using the tax system to do some social engineering. They do it now.

In the meantime we work like crazy on finding clean, alternative sources of energy.

[albie60]

Environmentalists need to support Republicans to achieve green goals!

Environmentalists hate oil companies (agree?)

Environmentalists are Democrats (agree?)

Democrats support labor unions (agree?)

Democrats won't break UAW union (agree?)

Support republicans, they'll force bankrupcy, allowing the Big 3 to break the outragious union labor agreements, which will enable the Big 3 to build inexpensive green cars, and make a profit.

[got2Bkidding]

Forget that I totally disagree with you about breaking the UAW...

Would you buy a car from a company in bankruptcy?

GM announced that they were going to stop making the Oldsmobile line 18 months before they actually did. They couldn't give an Oldsmobile away in those 18 months. Forget that Oldsmobiles were functionally equivalent to their Chevrolet and Buick counterparts. GM would still be making parts for the Olds, because they would be making them for the Chevy and Buicks.

Forcing the Big 3 into bankruptcy would serve only 3 purposes.

1. The Unions would be busted
2. Suppliers wouldn't be paid, therefore forcing them into bankruptcy or closing their doors. Either way more people lose their jobs.
3. Effectively killing of the Big 3. Since no one is going to buy a car from a company in bankruptcy.

But hey, why do we need any manufacturing in this country anyway? Let the Chinese do it all.