Chicago Mayor and former Obama chief of staff Rahm Emanuel went after GOP presidential contender Mitt Romney yesterday over the 2008-2009 state of the auto industry. Emanuel, as paraphrased by the Associated Press, believes that "had Republican candidate Mitt Romney been president the nation would no longer have an auto industry" -- though last time I checked, Ford Motor Company, which did not accept federal government bailout money, is still headquartered in Dearborn, Michigan, which is still in the USA.
In his coverage of Emanuel's comments, the Detroit News's Dave Shepardson -- who infamously and falsely claimed in February 2010 that Toyota executives "bragged" and "boasted" about saving money on safety recalls when Japanese culture deeply frowns on the practice to the point of shunning people who engage in it -- headlined Emanuel's "no industry" howler, and committed several factual errors. In addition, he missed a quite relevant and critical March 2009 episode of support from Romney -- for better or worse (readers can decide) -- when President Obama engineered the ouster of General Motors' CEO. Here are excerpts from Shepardson's shilling:
Chicago mayor: No auto industry if Romney had been president
In an interview with NBC's "Meet the Press," Emanuel, a former Chicago congressman who served as President Obama's first chief of staff, criticized former Massachusetts Gov. Mitt Romney's approach to the auto industry.
"There would not be an auto industry if Mitt Romney was president. He would have said, 'Let it go bankrupt,'" Emanuel said, arguing the nation is a "stronger country" after the turnaround of the U.S. auto industry.
President George W. Bush gave General Motors Co., Chrysler Group LLC and their finance companies a $25 billion bailout.
The Obama administration added another $60 billion to the auto industry bailout and put GM and Chrysler through government-sponsored bankruptcies in mid-2009 and put the companies under new management.
Emanuel touted Obama's restructuring of the auto industry. "He entered a financial situation that had frozen up to the point where it was near collapse and an auto industry on the door of bankruptcy," Emanuel said. "At every level, the auto industry that was first started here in the United States, is stronger and better and more prepared for the future than it was when he was in office."
... The Romney campaign rejected Emanuel's comments.
"Mitt Romney argued that instead of a bailout, we should let the car companies go through a restructuring under the protection of the bankruptcy laws. This is the course the Obama administration eventually followed. If they had done it sooner, as Mitt Romney suggested, the taxpayers would have saved a lot of money," Romney spokesman Ryan Williams said Sunday.
Romney told The Detroit News last month that he was right to call for managed bankruptcy filings of GM and Chrysler in late 2008 — and he pledged a speedy sell off of the government's remaining stakes in GM and Ally Financial Inc.
... In August, the Treasury upped its estimate of predicted losses on the $85 billion auto bailout to $14.3 billion. Since then, GM's stock has fallen sharply — and the government could lose $15 billion or more on its GM bailout.
Shepardson's three key errors are as follows:
- His $25 billion figure for Bush bailouts includes $17.4 billion which went to General Motors and Chrysler, another $6 billion for GMAC, and, apparently, some generous upward rounding. But GMAC got TARP bailout money because "it became a key player in subprime mortgage lending and other risky finance that fueled the financial crisis." An Inspector General's reported hotly disputed the notion that the GMAC bailout had any the auto industry at all, claiming, in Fox News's words, that "there was no evidence that GMAC's failure would upend the financial system, or that it was 'too big to fail.'"
- The government "aid" to GM and Chrysler also included what probably amounted to several billion in "free capital" delivered to the post-bankruptcy versions of each company via the ripping off of certain secured creditors in Chrysler's case, and unsecured bondholders in GM's case.
- While overstating the Bush element of the bailout money, Shepardson understated the current estimated losses to the government in the GM bailout. It was $14.3 billion as of June 30, but since then (through Friday's close), GM's stock has lost over $8 per share, falling from over $30 to about $22. That's less than two-thirds of its November 2010 initial public offering debut closing price of $34.19. The government, which still owns 500 million GM shares, has lost about $4 billion more since June 30, bring the current estimated loss to $18.3 billion -- about 20% "more" than Shepardson's "$15 billion or more."
Emanuel conveniently ignored -- but Shepardson shouldn't have -- the fact that when Barack Obama engineered the boardroom coup which ousted CEO Rick Wagoner in March 2009, Mitt Romney forcefully spoke out on CNN in favor of Obama's actions. The video is no longer available, but here is a saved picture of CNN's summary of what transpired:
But of course, reporting Romney's support for Obama's actions would have undermined Emanuel's core contention that Mitt Romney wasn't interested in seeing action taken to "save" General Motors. It's to be expected that craven politicians like Emanuel would try to get away with saying that, but it's inexcusable that David Shepardson let him.
Cross-posted at BizzyBlog.com.