An op-ed in today’s Times from Steve Rattner, who served as lead advisor on the 2009 Auto Task Force. He is, however, a Democrat so my conservative friends are free to disagree with every word.
Without government financing — initiated by President George W. Bush in December 2008 — the two companies would not have been able to pursue Chapter 11 reorganization. Instead they would have been forced to cease production, close their doors and lay off virtually all workers once their coffers ran dry.
Those shutdowns would have reverberated through the entire auto sector, causing innumerable suppliers almost immediately to stop operating too.
Despite the relative health of its balance sheet, even Ford would have been forced to close temporarily, because critical parts would have become unavailable. And service providers — trucking companies, restaurants and more — would have been severely affected.
More than a million jobs would have been lost, at least for a time. Michigan and the entire industrial Midwest would have been devastated. . . .
I consider myself an ardent capitalist, and well recognize the risks of government intervention, particularly the “moral hazard” of rewarding failure and the scary prospect of politics’ entering private sector decision-making.
But when markets fail, as they did for both autos and banks in 2008, government should have the ability — in fact, the obligation — to step in.