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BRIDGE BRIEFING: Romney And The Auto Rescue

Romney Opposed Government Involvement In The Auto Industry

Romney Wanted To “Let Detroit Go Bankrupt” And Said The Demise Of The Auto Industry Would Be “Virtually Guaranteed” By A Government Bailout. According to Romney, “If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed. Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.” [Romney Op-Ed, New York Times, 11/19/08]

Romney Opposed The Bailout Of The Domestic Auto Industry. According to the Detroit News, “On the federal ‘bailout’ in 2008 of the domestic auto industry, Romney writes he opposed the billions provided ‘because it enabled GM and Chrysler to avoid the restructuring and productivity improvements essential for their success.’ The federal government has provided the auto industry with $86 billion, including $50 billion for GM and $12 billion for Chrysler. Romney urged a managed bankruptcy, a step the Obama administration eventually took to help stabilize GM and Chrysler Group LLC. ‘The managed bankruptcy that I proposed ultimately occurred,’ Romney writes, ‘but only after tens of billions of taxpayer money had been wasted, and only after sweetheart deals and paybacks for favored interest groups had been engineered with the public’s money.’” [Detroit News, 2/24/10]

Romney Believed Automakers Should Have Had Private Bankruptcy Without Federal Aid. According to the Associated Press, “Romney told a diner at the Senate Coney Island restaurant Thursday morning that the automakers should have gone through a private bankruptcy without the federal aid. The businessman and former Massachusetts governor says he believes ‘in the process of law’ rather than bailouts.” [Fox News, Associated Press, 6/9/11]

Romney Believed Things In Detroit Would Be Better Without Intervention.  According to a Detroit News op-ed, Romney wrote “The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.” [Detroit News, 2/14/12]

Romney Wrote That One Of The Agendas For A Free And Strong America Was To “Get The Government Out Of General Motors.” According to “No Apology” Mitt Romney wrote that one of the agendas for a free and strong America was to “Get the government out of General Motors—and other private companies.” [“No Apology” 2011 Pg. 318]

 

There Was No Private Funding For A Managed Bankruptcy

Romney’s Suggestion That Private Financing For The Auto Bailout Existed Was A “Denial Of The Facts” Because The Credit Markets Were Too Tight. According to the Detroit Free Press, “The man who oversaw the rescue of General Motors and Chrysler said Tuesday that if Mitt Romney believes the companies would have survived without government financing in 2008 and 2009, he doesn’t understand how bad the financial crash — and the tightening of credit markets — was at the time. Steven Rattner, a Democratic supporter who ran a private investment firm before coming to Washington to help rescue GM and Chrysler, told the Free Press in an interview Tuesday that Romney’s position on the so-called bailout is ‘ridiculous … a complete denial of the facts.’ Rattner said it’s wrong for Romney to suggest there was any other private financing available that would have propped up the companies and kept them from liquidating in 2008 and 2009. The credit markets were too tight, he said. ‘He’s trying to sharpen his conservative chops,’ Rattner said. ‘He’s afraid of being perceived as a moderate.’” [Detroit Free Press, 2/15/12]

Romney Supported A Managed Bankruptcy For The Auto Industry Using Private Money That Was Not Available At The Time. According to Talking Points Memo, “On Fox News Sunday, former Obama adviser and car czar Steven Rattner disputed Mitt Romney’s claim that Washington followed his advice on how to handle the auto industry rescue through a managed bankruptcy, calling the claim ‘completely false.’ Rattner’s argument is that Mitt Romney opposed government aid to the flailing companies and that aid was crucial to saving them. Rattner argued that there was no private money available at the time to prop up the companies, necessitating government help. ‘There was no private capital. That’s not a hypothetical. That is a fact. I was there, President Bush was there. It would have been government money or nothing. And if it had been nothing…[the companies] would have liquidated and they would have laid off hundreds of thousands of workers. That is a fact.’” [Talking Points Memo, 6/3/12]

 

Bain Capital Refused To Help Invest In Auto Industry Recovery

Bain Capital Was Approached About Investing Capital To Save GM’s European Operations; Bain Refused. According to The New York Times, “To go through the bankruptcy process, both companies needed billions of dollars in financing, money that auto executives and government officials who were involved with Mr. Obama’s auto task force say was not available at a time when the credit markets had dried up. The only entity that could provide the $80 billion needed, they say, was the federal government. No private companies would come to the industry’s aid, and the only path through bankruptcy would have been Chapter 7 liquidation, not the more orderly Chapter 11 reorganization, these people said. In fact, the task force asked Bain Capital, the private equity company that Mr. Romney helped found, if it was interested in investing inGeneral Motors’ European operations, according to one person with direct knowledge of the discussions. Bain declined, this person said, speaking anonymously to discuss private negotiations.” [The New York Times, 2/19/12]

Bain Capital Turned Down Chance To Provide Loans For GM And Chrysler To Go Through Managed Bankruptcy. According to The Atlantic, “Mitt Romney says that he opposed the government bailout of Detroit because the private market would have provided loans so GM and Chrysler could go through managed bankruptcy, but it turns out the firm Romney once led, Bain Capital, turned down the chance to do so. The government’s auto task force asked Bain Capitol if it would like to invest in GM’s European operations, The New York Times’ Jeremy W. Peters reports, but Bain said no thanks. Detroit executives and Obama administration officials say that Romney is wrong: government money was necessary because at the worst of the financial crisis, private companies would not have lent the $80 billion the automakers needed. Based on The Times report, we now know that the government’s argument was true in the case of at least one company: the one Romney helped found and shape.” [The Atlantic, 2/20/12]

 

Romney Tried To Take Credit for Auto Recovery

Romney Took “A Lot Of Credit” For Auto Industry’s Recovery. According to the Huffington Post, “Despite his 2008 call to ‘let Detroit go bankrupt,’ presumptive Republican presidential nominee Mitt Romney said Monday that he would ‘take a lot of credit’ for his impact on the U.S. automobile industry’s comeback. ‘I pushed the idea of a managed bankruptcy,’ Romney said. ‘And finally, when that was done, and help was given, the companies got back on their feet. So I’ll take a lot of credit for the fact that this industry’s come back.’” [Huffington Post, 05/08/12]

Romney Said He Would Have Been “Fine” With Government Support To The Auto Industry But Only After A Managed Bankruptcy. According to The Detroit News, “[During an interview] Romney said Democrats are ‘distorting’ his record on the auto bailout, whose government-imposed conditions included filing bankruptcy. ‘If they needed help coming out of bankruptcy and government support, that was fine, but I was not in favor of the government writing billions of dollars in checks prior to them going into bankruptcy,’ he said.” [Detroit News, 6/5/12]