Grand Theft UAW: Chrysler & GM Bankruptcies
Friday, May 29th, 2009
When President-elect Barack Obama met with then President George W. Bush at the White House last November they spoke of providing short term liquidity for the beleaguered auto industry. Conveying the hopes of Obama, John Podesta reported
“He’s hopeful the government will look for additional authority to deal with the short-term liquidity crisis … and get onto a program and a plan that would ensure that the auto industry can … continue as … independent companies …”
AIG CEO Edward Liddy took on the ills of the insurance giant with a sense of public service not seen since titans of industry answered the same call during the great depression. His compensation for this task: $1 per year. None the less, the Congress needed a scapegoat to avoid scrutiny from passing a Stimulus Package that included a clause protecting those bonus payments paid by AIG that prompted the public outrage and these congressional hearings. While none of the congressmen grilling Liddy bothered to read the mammoth $787 billion stimulus bill before voting to pass it, they were more than happy to turn the public’s outrage over the $165 million in bonuses toward Liddy rather than having it reflect on their own incompetence and deception. 
The throngs of youth and hopeful who had faith in Candidate Obama’s promise of change will dwindle as President Obama prepares to sign a bill crafted in Democratic committees on Thursday and rammed through Congress by Democratic majorities a day latter before anyone could possibly review the details of the monstrous package that exceeded 1,000 pages. It appears approximately $500 billion will be spent on infrastructure, education and public housing as dictated by Democrats. The only portion that will find it’s way into the economy immediately is the $287 billion in tax relief pleaded for by Republicans. The Congressional Budget Office called the plan a spending bill rather than a stimulus plan and added that future growth would be better served by doing nothing than the drag borrowing for the massive spending bill will cause. 
House Oversight and Government Reform Committee Chairman Henry Waxman, Democrat from California, began dragging Wall Street titans from failed institutions in front of his committee on Monday to answer for the world wide credit crisis that has devastated markets around the globe. There is no doubt, as confirmed by their own testimony, that greed in these institutions ran rampant with generous bonuses being dolled out to parting executives even as those institutions became insolvent and headed toward bankruptcy. These true confessions make for great theater and give those affected by the rapidly declining economy a target for their disgust and frustration but ignore the fact that the primary cause of the failures were the non-performing portfolios dominated by sub-prime mortgages generated in staggering dollar amounts under guidelines set by the quasi-government mortgage institutions of Fannie Mae [FNME] and Freddie Mack [FMAC]. 
Oil company executives are dragged before Congress time and again suffering indignities at the hands of elected officials who are more to blame for the current oil prices and pending shortages than the industry titans that have consistently delivered this complex product for more than a hundred years with the exception of 1973 when the Arab Oil Embargo sent a delicate delivery system into disarray. Exxon-Mobil, British Petroleum, Shell Oil and others are threatened by the legislators with excess profits taxes on profits that, while staggering by their numbers, are hardly excessive representing eleven percent or less on investment over the last five years. They are more than willing to invest these profits developing new domestic supplies and refineries to process petroleum products were it not for the restrictions imposed by the pompous interrogators who cast a shadow of wrong doing but never issue an indictment for their acts. 
Hillary Clinton once again called for a 90 day moratorium for mortgage foreclosures on owner occupied homes and a 5 year freeze on interest rates on sub-prime mortgages at the star studded political event at the Kodak Theatre in Los Angeles. The idea does not receive the same applause on Wall Street as it did on Hollywood Boulevard last night. Speaking from the floor of NASDAQ last December Hillary called on the investment community to find an alternative to their legal redress being careful to note this wasn’t a quick fix for the industry: