The auto bailout has a special place in this bloggers heart, because while I started blogging again in November to express my frustration towards the other incompetence of the McCain Campaign up to and including their trying to place all the blame on Sarah Palin, the auto bailout was the first issue I really sunk my teeth into. I gave it a catch name, “Grand Theft Auto Bailout,” and blogged aboot how the whole deal stunk on ice.
And it ended the way we all thought it was going to end. We have the Big Three (or Two, since Ford said no) billions of dollars for a loan, and it was time to collect they a) didn’t do anything that was expected of them, and b) wanted more money. The end result was the government taking over GM, they got more money, and we got doubts that we were ever going to get it paid back.
So when I read things like this, you can imagine how warm and tingly it makes me feel. So sayeth the fair and balanced folks from the Heritage Foundation…
The headline news, reported in most major media: the money won’t be paid back, not in full anyway. Even if the firms return to viability, taxpayers — said the panel — will likely never be able to recoup anywhere near all of the $77 billion or so they have put in them. That conclusion, however, was hardly surprising — most observers long ago wrote off hopes of taxpayers breaking even on the bailout deals.
Of more interest was the criticisms leveled by the bi-partisan panel — chaired by Elizabeth Warren of Harvard Law School — of the way the program was (and is) run. Among these: a failure to define the goals or critieria for the bailout, lack of transparency, and a lack of an exit strategy — leaving the question of when (if ever) the government will be selling its ownership stakes in GM and Chrysler. The report also questioned the government’s ability — as part-owner of these firms in a competitively-neutral hands-off manner, recommending that ownership be transferred to an independent trust.
The panel also provides the most comprehensive discussion to date of the legality of the bailouts. Since the law creating TARP limits funding to “financial institutions,” many (including some of us here) have argued that there was no legal basis to provide aid to the auto companies. Stopping just short of flatly declaring the whole affair illegal, the panel requested a legal opinion from the Treasury Department on the question.