The Obama administration continues to use the clout it has bought with the taxpayers’ money to impose its own vision on American industry.
Many banks were pressured into taking TARP bailout money knowing full well there would be strings attached. But I doubt they had any inkling of just how those strings would be pulled. Likewise, when GM and Chrysler asked for and accepted federal loan guarantees, they probably expected there would be more restrictions than when Chrysler did it in the 1970’s. But I doubt they foresaw what would happen.
The Obama administration has adopted an ownership mentality towards the institutions they granted money and guarantees, and intends to show the world that it can run these businesses better than the people who’ve spent their entire careers in the fields of finance and auto-making. (To be fair, those worthies haven’t exactly done a bang-up job, either, or they wouldn’t have gone hat in hand to Washington.)
Well, President Obama’s hand-picked Car Czar, Steven Rattner has chosen the plan to “save” Chrysler. Chrysler will be sold off, and Ratner has narrowed down the list of buyers to precisely one: Fiat. And to help entice Fiat to make the deal, some of Chrysler’s biggest creditors will write off billions of debt.
Why would Chrysler and its banking creditors buy into this deal? Because they accepted federal bailout money. The Golden Rule prevails — that is, “Them with the gold makes the rules.” Chrysler took federal funds, so it has to sell itself to whomever the government says. And the banks took federal funds, so they have to write off whatever debts the government says.
That was Rattner’s initial plan, anyway. The banks — once they pulled their collective jaws off the floor — said they’d come up with a counter-proposal. One that will presumably give the banks some kind of incentive or reward for helping Chrysler.
Right now the “incentive” for all the players is brute force. They have been told, in no uncertain terms, that they should not fear the government; rather they should fear the American people. Indeed, President Obama told a meeting of banking executives recently that “my administration is the only thing between you and the pitchforks” — a statement eerily reminiscent of mobster thugs running a protection racket.
This is the message of the Obama administration: if you play ball with us, understand that we instantly become the boss. We set the rules. We call the tune to which you will dance. And we will change that tune whenever it suits us.
And if you don’t, then may the fates be merciful. Because we won’t.