Emmanuel Dunand/AFP/Getty Images
Republican presidential hopeful Mitt Romney holds a Caucus election night at Red Rock Casino in Las Vegas, Nevada, February 4, 2012. AFP PHOTO/Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP/Getty Images)
Mitt Romney is doubling-down on his negative view of the the 2009 bailouts and bankruptcies of General Motors and Chrysler. In late 2008, he argued in the New York Times that a bailout of Detroit would mean the end of the U.S. auto industry. Today, in the Detroit News, he refuses to back off from his earlier position, says that a "managed bankruptcy" of GM and Chrysler was what was needed all along, and that the Obama administration practiced:
"...crony capitalism on a grand scale. The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.
Before the companies were allowed to enter and exit bankruptcy, the U.S. government swept in with an $85 billion sweetheart deal disguised as a rescue plan.
By the spring of 2009, instead of the free market doing what it does best, we got a major taste of crony capitalism, Obama-style.
Thus, the outcome of the managed bankruptcy proceedings was dictated by the terms of the bailout. Chrysler's "secured creditors," who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs' union-boss-controlled trust fund received a 55 percent stake in the firm.
Steven Rattner, the Obama Administration's "car czar" who oversaw the bankruptcies and bailouts of both General Motors and Chrysler, went on CNBC this morning talking about what he described as General Motors' "stretch goal" of $10 billion in profits and a 10 percent profit margin in 2012 (and beyond). Rattner also took the opportunity to ding Mitt Romnney for his "flip-flops" on whether the bailouts were a good thing (read all about them here on the op-ed page of the New York Times). GM is expected to report an $8 billion profit for 2011, so it's getting much tougher to argue that this is a company that shouldn't have been allowed to survive.
Rattner is obviously proud of his work and has good reason modestly boast while supporting GM's "energy and ambition." But I think he might be wrong to side with a Wall Street Journal piece (sorry, can't find the link) that insists GM should never again focus on market share over profitability. The idea here is that making money is more important than pursuing an abstract number that doesn't necessarily contribute to the bottom line. After all, you could have 10 percent share of the U.S. market (GM currently has about 18 percent, down from 21 percent for 2011) and still make a lot of money.