Detroit is out in the rain again, as Treasury Secretary Hank Paulson has ruled out using his $700b TARP fund to bail automakers out, according to the Freep. “I know that automakers are important to the U.S. economy. We care about our automakers,” Paulson said at today’s “TARP progress report”. But, says Paulson, “the intent of the TARP was to deal with the financial industry.” But Treasury recalcitrance isn’t just a question of principle. Paulson seems to have got the crazy idea into his head that the Detroit Three need more than the Treasury can offer right now. Aid to the industry “has to lead to long-term viability,” according to Paulson, implying that somehow a TARP-based band-aid might not do the trick. His solution? Expediting the retooling loans that congress has already approved. “We have a viewpoint that that legislation could be modified,” said Paulson. Of course, in practice this would mean stripping away everything resembling the original intent of the $25b retooling loan program. Like the requirements that it be used for retooling, that qualifying firms prove economic viability, and that it be used solely to build fuel-efficient vehicles. In other words, turning retooling loans into the short-term “bridge loan” that Paulson won’t fork over. Can it be done? Theoretically, yes. Can it be done in time? Not so likely.
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First Paulson runs breathlessly to Congress with the draft of a law giving HIM $700B to use as HE wished with NO REVIEW BY ANY COURT. This morphed into the Troubled Asset Relief Program whereas the government would buy trouble assets. Now today, HE has decided the government won’t be buying troubled assets. Why? Politics between Obama/Bush, Paulson changed his mind, they’re out of money, and/or they can’t value these trouble assets. Who knows, but it’s obvious that Paulson, like his boss, has no damn clue. And he gets uppity when it comes to keeping the car companies floating til some adult supervision can take over. Katrina II.
There’s no incentive for Bush and Company to rush into a bailout. The areas that need it most are not the least bit red.
Of course, the President Elect Who’s Also Junior Illinois Senator can still introduce legislation specifically aiding the auto biz. He and Harry and Nancy can craft a bill and put it on Bush’s desk next week.
But they won’t. They need bipartisan cover on this, because, regardless of what legislation passes, a Domestic Blowup may happen.
When your roof fails, you put a tarp on it till it can be fixed. The TARP is not a replacement.
Time to get the pots and pans out to catch the drips…and all for the price of a new house for SOMEONE ELSE !!!!!
Paulson lost any once of credibility today when he said that the $700 billion bailout fund isn’t going to be used to buy those “toxic debts” which are “clogging the credit markets”.
This is the mother bleep of all bait and switch routines.
This guy is going to go down in history as the Treasury Secretary who took a bad situation and made it much worse.
Yes, but bottom line is that if in the end no one gets taxpayer money, then they are doing the right thing.
Bankrupt all the failures and then we can start rebuilding on merit.