Wednesday, November 19, 2008

Mitt: Bankruptcy, Not Billions, For Detroit

Former Mass. governor and presidential candidate Mitt Romney told Fox News that the U.S. auto industry should restructure pursuant to the bankruptcy code, rather than soaking up additional billions from a taxpayer bailout.

His perspective is worth noting for two reasons. First, as Hot Air points out, Romney's family made its money in Detroit's auto industry. Second, by profession, Romney is a turn-around guy. In fact, in discussing the need for outside faces to reform the auto industry, Romney sounds like he'd enjoy the challenge of making Detroit globally competitive. And I don't doubt that he could do it.

Romney makes the point that a bankruptcy is a restructuring, not a liquidation (essentially the difference between Chapter VII and Chapter XI of the bankruptcy code).

As a result, bankruptcy is an opportunity; it would give Detroit the chance to rewrite contracts -- including with labor -- to allow Detroit to reduce its costs. Those savings would be passed on to consumers, which is the only way that American auto makers can compete with Japan and company.

On the issue of executive compensation and perks, Romney sounds down-right populist. This could be a good issue for Romney while he waits for 2012. Recall Lee Iacoca; he saved Chrysler, wrote a book. Then everyone wanted him to run for president.


Jason said...

For those GM employees concerned about their retirements don’t fret the Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of nearly 44 million American workers including those at GM.

The only problem is that the taxpayer is the Pension Benefit Guaranty Corporation. Keep GM and its employees working or pay for their retirements.

knowitall said...

The elitist illuminati want to give them billions, but the automaker really wants to file bankruptcy and cheat people out of their insurance.