Wednesday, November 19, 2008

You mean they've already got one of those?

Hey, Representative Barney Frank, what's the Big Idea [1] for bailing out the UAW Big Three Automakers?

Steve Inskeep: I want to ask you about something mentioned in that report from an economist from the University of Maryland. What makes you think the $25 billion would even be enough?

Rep. Barney Frank: We don't think it would be enough. The way we have this structured, they will get $25 billion if the bill passes, with a lot of conditions.  But they would have to prepare and file by March 31 a plan that shows how they plan to get much more efficient and to get cars that can be marketed.

But let me ask you about the first thing you said, Congressman, because you said you don't think $25 billion is enough.

Right, I'm trying to explain to you how it works.


They get $25 billion — the federal government would be in the first position to be repaid. We will come ahead of the debt holders, the shareholders, etc. They file this plan on March 31. If, on March 31, the president does not believe that this is going to get them the viability with energy efficiency cars, they have to repay the loan; they get no more money. If they can show by March 31 a plausible way to go forward, then we would consider giving more money, again, under equally stringent conditions.

The test of any idea is 'would I do it with my money'.  Because that is what is really going on here.

I'm being asked to loan a whole bunch of money to three businesses that are over-extended, are saddled with a lot of debt and obligations their competitors don't have, who have made some bad choices in the past and find themselves in a bit of a pickle.

They've got three months to work up a plan to make efficient cars and market them.  Because, I guess, up to this point the boys in Marketing have been playing Hearts in the break room.  God only knows what the engineers have been doing instead of their jobs, all this time.

Then they submit this plan for approval to a guy who has never worked for a for-profit company and whose business experience is nil. 

And if this guy says 'yes' then I will loan these folks more money.  How much more is not specified .. and the spokesman for the plan gets kinda shifty-eyed and starts talking about a bunch of hoo-ha when I ask how much.

Pass - but thanks for the opportunity!  I think I'd rather keep my money in a high-interest savings account instead of .. well you didn't say what the interest rate would be did you?  Hmm.

I've got a better idea!  Why don't we draft a law so that any company could go to a special court and get protection from creditors while they reorganize?  Jobs might be lost, but not all of them, some creditors might have to settle for partial payments .. but it is sure 'nuff better than the entire shebang going out of business.

Crazy idea, I know - but it's worth a shot.

Cross Posted to The Daily Brief.

[1] Idealism is based on big ideas. And, as anybody who has ever been asked "What's the big idea?" knows, most big ideas are bad ones.
O'Rourke, P.J. (1994), All the trouble in the world. The lighter side of famine, pestilence, destruction and death. Sydney (Picador), 256
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