If you remember correctly, the US federal government bailed out GM because, according to President Obama in a 10 Dec13 speech, “one million Americans were in danger of losing their jobs.” What do we, the American taxpayers get for saving this iconic developer of second rate vehicles, the president went on; “in exchange for rescuing and retooling GM and Chrysler with taxpayer dollars, we demanded responsibility and results.” Even liberals have to admit by 2014 this line of responsibility, accountability and results coming from the weakest national administrator in US history are truly just community organizing pablum. Many people don’t even know that the U.S. government lost $11.2 billion on its bailout of General Motors Co (GM.N), more than the $10.3 billion the Treasury Department estimated when it sold its remaining GM shares after the 2012 election, according to a government report. Ironically (or under this president we can now call it standard) the US taxpayer took the brunt of the incompetence of GM/federal government leadership. For all the “income inequality”, “pay your fair share” and “even the playing field” garbage spewing from our president’s pie hole; he routinely sacrifices the middle class taxpayers’ dollars to serve his own selfish liberal objectives.
Since the bailout, we have learned that GM’s leadership at all levels from CEO to UAW Shop Stewards attempted to cover up inadequacies in product safety and protect their collective assses by hiding real data pointing to defects that led directly to the loss of consumer lives. Until they were caught, GM did nothing. Since they are now caught GM paid a $35 million fine and agree to "unprecedented oversight requirements" as part of a deal with the U.S. Department of Transportation over its recent recalls. Sound familiar? Exactly how unprecedented can the oversight be in 2014, when our illustrious federal government had already “demanded responsibility and results”, during the bailout oversight period (the exact same time the defects were discovered). GM has recalled millions of cars in recent months and already taken or announced charges of about $1.5 billion. A faulty ignition switch in some older cars has been linked to 13 deaths, and GM has now expanded a safety push to other models with other defects, not unexpectedly.
The deal with the National Highway Traffic Safety Administration (NHTSA) covers GM's "failure to report a safety defect ... in a timely manner." The fine—the maximum allowed by law—represents roughly two hours' worth of GM's revenue or about one month's profits, based on its results in the first quarter of 2014. The consent order between the two sides also requires GM to give the NHTSA full access to the results of GM's internal probe into the recalls. Now GM has a new CEO and what does she say, "We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety," GM CEO Mary Barra said in a statement. "We will emerge from this situation a stronger company." Sound familiar?
The point of this post is not to focus on the lame leadership of President Obama, but point out how dangerous and costly it is for the US federal government to get involved directly with industry. If we had followed the normal course of bankruptcy in the GM case, two outcomes would have certainly been different and perhaps a third might have never materialized. In a normal bankruptcy, taxpayer funds would not have been lost, creditors would have demanded transparent operations in order to make sure the company was working its way out of debt and maybe, just maybe people would not have been killed by this morally and soon to be financially bankrupt company.