General Motors — VOICES for REASON

The “great source of consistently outstanding reporting and commentary on the auto industry” I mentioned in my blog post yesterday is: Holman Jenkins of the Wall Street Journal (and author of the excellent antitrust column featured in my last blog).

Where others assume that all of Detroit’s problems can be blamed on bad managers, Jenkins points out the real sources of their decisions.

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As taxpayers are forced to pay $50 billion to bail out the massive corporate failure that is GM, it is crucial that America’s reporters and analysts accurately break down the series of events that brought us here. Unfortunately, the recent GM retrospectives in top newspapers evade the elephant in the room — which in this case is joined by a donkey. The biggest player in the GM breakdown (and in the broader failure of the US auto industry) is the United States government, following both Republican and Democrat policies. The stories all focus on the failed policies of GM’s management — but conveniently omit how the government was instrumental in forcing these policies on them.

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As General Motors nears its Feb. 17 deadline for submitting a viability plan, there’s no “Car Czar” in place to review it. Under the current bailout scheme, GM must appease this yet-to-be-named industry dictator to qualify for another $4 billion in public money.

I have a better idea. There’s a whole group of federal employees already hired and in place, just waiting for jobs like this. They have decades of experience in scrutinizing the revival plans offered by failing businesses. And if GM would only ask, they would be happy to swing into action.

I’m talking about the federal judges who oversee our nation’s bankruptcy courts. As I said in my latest op-ed, bankruptcy laws are designed to achieve a just outcome when businesses can’t meet their financial obligations:

Under bankruptcy, the risk of financial loss stays right where it belongs, on those who assumed the risk of non-payment by voluntarily dealing with a badly managed company. But in Barney Frank’s bailout universe, Congress can simply paper over the reality of business failure by shifting those losses to taxpayers, competitors, and consumers–in short, everyone who doesn’t deserve to pay.

Message to President Obama: Turn off the Bush bailout spigot and let the bankruptcy courts decide whether GM has a shot at recovery–with private financing.