Auto bailout talk is history repeating
If the Big Three's conversation with the government over a possible bailout sounds familiar, you were probably around in 1979, when the same thing was happening. So what was the result? Alisa Roth has the story.
Detroit skyline with General Motors headquarters standing tallest (Spencer Platt/Getty Images)
More on Auto Industry, America's Financial Crisis
TEXT OF STORY
Scott Jagow: I just read an article in Time Magazine about a car maker bailout. In the article, critics say, why should a huge company be bailed out while thousands of smaller firms have to go through bankruptcy? And bailout supporters say the U.S. economy can't afford big car makers to fail. The article was published in August 1979. It's about Chrysler.
Congress might want to look through the archives as it holds hearings today and tomorrow on the Big Three's request for help. Alisa Roth has more.
Alisa Roth: Read the news from 1979 and you understand why Gerald Greenwald's experiencing deja vu. Greenwald was a vice president at Chrysler back then, and helped negotiate a big bailout from Congress.
Gerald Greenwald: The issues, the problems, the risks, they're literally the same. I mean, there was a recession, there was the question of would Chrysler be better off cleaning up its act through bankruptcy. Virtually everything.
Mary Ann Keller is an auto industry analyst who thought bankruptcy would've been smart. She testified before Congress in 1979, against a rescue plan.
Mary Ann Keller: In fact, what the government did was very clever. Because the government actually mandated the equivalent of a reorganization and restructuring as a condition of granting the loan guarantees.
And it helped -- not only did Chrysler get the money from Congress. It paid the loans back. Maybe that's the one piece of the story where a sense of deja vu wouldn't be so bad.
In New York, I'm Alisa Roth for Marketplace.
Comments
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From PA, 02/12/2009
DO YOU THINK THAT THE 95 BILLION BAILOUT FOR HEALTHCARE WILL HELP OR BE MISMANGED AS OF THE ADDITIONAL BAILOUTS
From St Paul, MN, 12/04/2008
Before we give them a bailout, how about asking the workers both white and blue collar to accept wages equal to the average equivalent worker in the US? The excesses of the union contracts such as the 95% pay when laid off are just as obcene as multi million dollar CEO pay. Furthermore, lets have the high level managers who were responsible for this situation work for the same salary as comparable Japanese managers.
From Kingstree, SC, 12/04/2008
One of the major reasons the Auto Manufacturers are in trouble is that their labor agreements are unrealistic. Now we want to bail out the home builders because there is a glut of homes. There is always a cause and effect. Funds to either of these interests will only reward those who have not been prudent.
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