Bush Punted on GM and Chrysler … But Not Cerberus

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As you’ve no doubt heard, Cheney confessed yesterday that Bush punted the auto crisis into Obama’s lap.

CHENEY: Well, I thought that, eventually, the right outcome was going to be bankruptcy. … And the president decided that he did not want to be the one who pulled the plug just before he left office.

VAN SUSTEREN: Why?

CHENEY: Well, I think he felt, you know, these are big issues and he wouldn’t be there through the process of managing it, but in effect, would have sort of pulled the plug on GM and that was one of the first crises the new administration would have to deal with. So he put together a package that tided GM over until the new administration had a chance to look at it, decide what they wanted to do.

VAN SUSTEREN: But it’s cost us billions to get — I mean, you know —

CHENEY: It has. … And now the government owns a big chunk of General Motors. That bothers me. I don’t like having government own those kinds of major financial enterprises. I think it’s — it does damage to our long-term economic prospects when we get government involved in making those kinds of decisions.

Now, that was pretty clear at the time. That was sort of the subtext of what Bush said at the time:

… there’s too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisors believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession. And it would leave the next President to confront the demise of a major American industry in his first days of office.

Bush gave the car companies three months of funding (he claimed), so they would go bankrupt on the 100th day of Obama’s Administration, rather than the first.

But that doesn’t mean Bush was willing to leave all of this mess for his successor. He made damn sure, you see, that he took care of Cerberus before he left office.

He did so in two ways. First, in Christmas week negotiations that no one followed, Bush allowed Cerberus–and not Chrysler–to negotiate the terms of the December loan to Chrysler. And then Bush gave Chrysler just $4 billion–much less than Chrysler said it needed to survive those three months (by comparison, Bush gave GM more than they asked for). And even though Cerberus (and not Chrysler) negotiated that loan, Cerberus was barely on the hook to pay any of that money back. Given that Cerberus was trying to dump Chrysler on the UAW and bondholders at the time, the arrangement seems designed to drive Chrysler into liquidation without Cerberus losing much more on the deal.

And while Bush couldn’t find time to negotiate some kind of way forward for Chrysler (which Bush seemed determined to kill) or GM (which we know he was determined to keep alive for 90 days so Obama would have to deal with it), he did find time to negotiate bank status of GMAC in the last days of December last year. Now, Cerberus had to dole out 36% of its ownership stake to its members. And the deal–along with the financing it freed up for GM–did help the company’s sales at the end of last year. But Cerberus got to start sucking the federal teat just before its buddies in the Republican party turned over control of that teat to Democrats. 

So it’s not just that Bush left a crisis for Obama to deal with–that I’m not so  bummed about, because Obama’s team has proven way more competent to deal with it than Bush’s was. But Bush picked and chose which crises he’d address, and just happened to choose to solve Dan Quayle’s and John Snow’s crisis rather than Main Street’s. 

32 replies
  2. behindthefall says:

    Just noticed that TPMmuckraker says:

    The Washington Post reports today that, during 2005, Dick Cheney sat in on several of those CIA torture briefings, in an effort to persuade wavering lawmakers to keep backing the torture program.

    The news doesn’t really come as a shock — indeed, some close observers had already guessed that the then-veep was involved in the briefings.

    “Close observer”? That would be EW, to whose article TPM links.

    • Peterr says:

      One of these days, the guys at TPM will actually figure out how to spell either “Emptywheel” or “Marcy Wheeler.”

      Spencer, being either (a) a former TPM writer or (b) a guy, gets not only a link but mentioned by name as well.

  3. wavpeac says:

    Yes, and all those ditech commercials was GMAC trying desperately to look like it was refinancing and lending money.

    Read these complaints. This is what bailing them out continues to allow them to do to mortgage consumers. It’s sickening. As we bail them out, they continue to screw over consumers. There is a reason…there is more to come. This company has operated like a criminal enterprise and millions have lost their homes deepening the crises. I would really like to know the number…in regard to excess fees that middle class citizen has paid over the last 8 years…per capita. I would be interested to know how much of consumer debt has been created by these fees?

    I’ll bet it’s a mind boggling number.

  5. wavpeac says:

    Here’s a complaint written in november 08 as they were getting goodies to save their butts. Didn’t stop them from screwing people out of their homes though! Why doesn’t Obama stop this!!

    The refinances were bogus. This has all been a charade. My fear is that the gov’t will decide they too, need the fees to prevent a crash and then what?

  7. RIRedinPA says:

    Let my own horn tooting commence…I commented (#75) on this a few days ago in your blog post about Obama doubling down on the auto industry…when I was musing as to how despite me being an idiot I predicted back in November that both these auto companies would go bankrupt in June essentially because their business models were outdated and assumed smarter people than in both administrations would have seen this as well. So what was the impetus to foster them along for six months when we could have let them file Chap 11 in November…

    My thoughts on this is that the Bush administration was just playing kick the can with the auto bailout. Get them through January and let the next guy deal with it. I think the Obama’s knew both these companies were failed enterprises but didn’t think the economy, Wall Street, my parents, etc. could deal with more bad news, kind of a straw and a camel’s back deal.

    Anyhoo, now that Cheney is going all soft (he’s for gay marriage and rapport with islamofacist) and narcing Bush on the auto bailout when does Michael Savage declare him no longer a Republican in good standing?

  8. wavpeac says:

    Here’s a nice short one written just two days ago.

    We did a loan modification with Homecomings. Paid the payment with certified check and notarized the papers, with their notary. Sent both seperatly in THEIR Fed ex envelopes. They cashed the check and now say they never got either. Both fed ex envelopes were received by Homecomings. We have faxed copies of the whole thing, called daily for 37 days and no one there will help us. Finally got an Attorney last week. They won’t respond to him either. We’ve received threats of foreclosure and Homecomings has reported bad stuff to the credit bureaus. Everyone beware, they will cheat you.
    Dan

    Do you think there is a criminal enterprise going on!! And can you believe that even with O at the helm there is no help as these theives simply steal houses!! I know it to be true, because I am living it.

  9. wavpeac says:

    I’ll stop now…but it’s every thing I can do to watch o bail them out, as they are continuing their illegal behavior. I keep thinking something has got to give here. But then, it never does.

  10. plunger says:

    The Cerberus deal was pure payola to John Snow and the other co-conspirators who helped enable the Administration’s fraud on America. Snow lied every time his lips moved when he was the Treasury Secretary.

    P A Y O L A:

    On May 26, 2006 Snow announced that he would resign effective July 3. He said the White House would make an official statement the following week. On May 30, it was formally announced that Snow would leave this position. On this same day, it was announced that President George W. Bush had nominated Henry Paulson, CEO of Goldman Sachs, to replace Snow. On October 19, 2006, John W. Snow was named chairman of Cerberus Capital Management.

    In May 2004, it was revealed that Snow’s brokers had bought $10 million of debt issued by Fannie Mae and Freddie Mac on the day and day after Snow was sworn into office as Treasury Secretary. Snow claimed this was done without his knowledge in February 2003. When Snow found out, he divested the debt holdings. A Treasury ethics lawyer has found that the holdings did not represent a conflict of interest but had the potential to do so in the future.

    • TheraP says:

      And remember, you can click on any part of that map and it will open up the connections for that entity or person.

      If you click just once, you can move the little box around. If you click twice it will find the connections.

      Brown = people. Green = entities.

      Solid lines are current connections. Dotted lines are prior connections.

  12. wavpeac says:

    I just don’t get why Obama hasn’t stopped this. I keep wondering if he knows how badly consumers are being screwed and how much illegal behavior is going on? I have written to every congressman I can think of to tell and Obama but I have no idea as to whether or not anyone truly believes they are being so reckless and illegal. It’s hard to fathom unless it’s happening to you.

  14. plunger says:

    Interesting to see Patton Boggs in the Muckety mess with Cerberus. Everything needs to be viewed in terms of DECADES OF CRIMINAL COLLUSION AND RACKETEERING:

    Note that Patton Boggs was involved in lobbying on behalf of torture back in the nineties (The Torturer’s Lobby)

    Among the report’s most shocking examples of corrupted Washington spending priorities are the following:

    * Guatemala received nearly $91 million in U.S. assistance in 1991, despite the fact that U.S. military aid and commercial arms sales to Guatemala were suspended and the U.S. ambassador to Guatemala was recalled in December 1990. To maintain the money flow and gloss over its wretched human rights reputation, Guatemala spent more than $650,000 for Washington lobbyists and public relations experts. The law firm Patton, Boggs and Blow – at which Commerce Secretary Ron Brown was a former partner – was the biggest recipient, charging Guatemala $220,000 in 1991. Steven Schneebaum, chair of the pro bono committee and partner at Patton, Boggs and Blow, has been a member of the board of the International Human Rights Law Group for 12 years and says that the firm has done extensive work “in defense of human rights norms.” As far as Guatemala is concerned, he says, “We have a client that’s done some bad stuff, but I’m tired of taking the rap for every bad thing that a client has done.” He attributes CPI’s focus on Patton, Boggs and Blow to “a trend in the media now against successful firms.”

    If there were a Justice Department in the United States, the Racketeering charges would be coming fast and furious, and would involve most of the names you recognize in Washington DC.

    • TheraP says:

      If you move your cursor onto the line in the “map” – it clarifies the relationship (so, lobbyist or partner or whatever) It’s a very dynamic and interesting tool I stumbled on yesterday.

  16. Leen says:

    ot

    On the Rehm show and on the BBC this morning they brought up how Hillary Clinton was asking China to release the names of the innocent students and citizens killed on Tiananman square.

    Does anyone else find the U.S. focusing on human rights issues in China just a wee bit contradictory? Thousands are dead in Iraq as a direct consequence of our illegal and immoral invasion, who knows how many people have been tortured by the U.S. Seems a rather odd time for Secretary of the State Clinton to be asking China to print the names of the innocent students and citizens killed at Tiananmen square. Maybe we should start by printing the names of all of the innocent people killed in Iraq as a direct the last seven years. You know “walk the talk”

    What a hypocrisy?

  17. plunger says:

    Dan Quayle is a Director of Aozora Bank – what a mess!

    The people who run Cerberus should either be arrested for criminal stupidity, or we all need to acknowledge that this is a massive repository for the New World Order’s bad bets. Lehman, Madoff, GMAC Finance & Chrysler debt all in the same hands? It’s the STUPIDITY SUPERFECTA!

    Cerberus/Aozora could not survive another huge loss:

    Aozora Bank is listed as the No.1 unsecured creditor to Lehman Brothers with about $463 million USD in bank loans to the investment bank as it filled for Chapter 11 bankruptcy in Sept. 2008.

    On December 16, 2008, Aozora Bank announced that it had 12.4 billion yen exposure to the Bernard L. Madoff ponzi scheme.

    On April 25, 2009, it was announced that Aozora Bank and Shinsei Bank have entered into negotiations to integrate their operations in the summer of 2010, with an eye toward a eventual merger.

  18. Blub says:

    “And now the government owns a big chunk of General Motors. That bothers me. I don’t like having government own those kinds of major financial enterprises.”

    OK, Mr. Ex-CEO, Dick, you should know better than that. GM is NOT a major financial enterprise. It is an industrial and commercil enterprise. It is precisely this type of muddled thinking about what that means which put our economy into the position its in today. Everybody saw themselves as a bank, or an investment bank, or a private equity firm. This is actually one of the most fundamental distinctions in business: you are either a financial enterprise or you’re not – a widget maker or a financier of widget makers. GMAC is a financial enterprise, of course, but that’s a whole other discussion.

  19. NorskeFlamethrower says:

    AND THE KILLIN’ GOEZ ON AND ON AND…

    Citizen emptywheel and the Firepup Freedom Fighters:

    Absolutely the most important and susinct analysis of the auto crisis…”ca-CHING”, that’s the sound of another $25 goin to the Citizen Wheeler fund for honest journalism and history.

  20. siri says:

    If we EVER get anywhere near light of the dark and deep tunnel that was/is the Bu$h crime family saga, YOU Marcy, need badly to write a book!
    No one’s got this stuff, no one’s made the connections and certainly no one is going to or would shine a light on it all.
    ya know?

  21. Prairie Sunshine says:

    Well, GeeDubya finally beat daddy at something. Daddy left Clinton Somalia. GeeDubya left Obama the bailouts, the tanking economy, the immoral war, the torture, the…..

    • prostratedragon says:

      Daddy left Clinton Somalia.

      And a much bigger economic mess than is generally talked about, thanks partly to the banking/S&L scandal —some more history waiting to be written. Maybe one reason Daddy likes to keep in touch with Bill.

      But the main point is so true, Dub has left his successor the whole flaming world, so he wins in a rout.

  23. rosalind says:

    Darth related: I’m late to this part of PapaDick’s speech at the National Press club Monday, but the excerpts on Jon Stewart’s show left me gobsmacked.

    Cheney: Dick Clark, who was the head of the Counter-Terrorism Program in the run-up to 911, uhm, he obviously missed it.

    Questioner: Wasn’t he warning the White House for months of chatter of an attack?

    Cheney: Uhm, that’s not my recollection but I haven’t read his book.

    Capped by Sneery smile.

    Audience laughs.

    Laughs.

    • Leen says:

      Thanks..Stewart and his team are flat out brilliant.

      Cheney blaming Clarke demonstrates how sick he is

  24. kevsters says:

    It is mind boggling how much false information is spewed out on cable today. Pundits will say anything in the hopes that they can rewrite history.

    Here is Jim Kramer saying that GM stopped listening to Americans. Like the post says, wasn’t one of the major problems that they listened too much?

    Here’s the clip.

    http://progressnotcongress.org/blog/?p=1584

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