Bail Out Hypocrisy - Manufacturing Gets the Shaft, Financials Get to Craft

The White House is in full hypocrisy mode. While Obama Treasury Secretary Geithner tries to do a massive power grab, invites financial sector CEOs to craft policy and cooperate in their multi-trillion dollar U.S. taxpayer money pig fest, the auto industry is shipped to bankruptcy court. Even worse, Chrysler is to be broken up into good cars and bad cars, yet Italy (Fiat) gets the good cars and the United States gets the bad.

Meanwhile Obama Press Secretary Robert Gibbs struggles as reporters immediately question the different standards:

Some members of the press in the room snickered. One reporter muttered under his breath: "that made absolutely no sense." Luckily for Gibbs, and those who wanted answers, he was given another bite of the apple. Responding to a question on the sacrifice that mid-westerners were being asked to make, he noted that Obama himself had traveled to those hard-hit towns and was acutely aware of their despair. Gibbs himself said he had spent the night before on the phone with Michigan Gov. Jennifer Granholm.

But his remarks still seemed defined by vagaries. Gibbs dismissed one question as "general and somewhat non-specific." But when asked later if he wanted questions about individual banks, he said he didn't have specifics. Pressed repeatedly to explain why Wagoner was told to go but bank CEOs were not -- or, for that matter, why labor contracts for auto-workers were reworked when it was deemed illegal to revamp bonus contracts for AIG execs -- he declared a "hesitancy" to "look at every entity the same way."

Indeed, many politicians are saying ex-CEO Wagoner was merely a sacrificial lamb and an earlier article, which has now of course cannot be found, implied it was a pure political play to cause confusion with the anti-bail out GOP (to whom GM gave more money to).

Anyone else here not wanting someone who can't even deal with TurboTax deciding which U.S. corporations are viable and which ones are not? Yesterday on Meet the Press I am fairly certain if one imposed Hank Paulson onto Geithner, the talking points and even the phrasing would have been identical. Geithner gave completely false options and never mentioned temporary nationalization of some insolvent banks.

So, do we really want Obama's Geithner giving a thumbs up and thumbs down on large U.S. corporations fate, based on his track record? The Obama administration cannot even fire their CIO who had massive fraud and theft occurring right under his nose, magically cannot even challenge executive pay when it comes to financial institutions, never mind listen to the many economists and experts calling for some of these banks to be nationalized. So who believes they have any judgment in private sector viability analysis?

It appears as I was writing this blog post, even CNN has picked up on this obvious hypocrisy:

Several financial bloggers were discussing that very question in the aftermath of Wagoner's departure.

One blog that aims to keep an eye on Treasury Secretary Tim Geithner and is appropriately called GeithnerWatch, had a post titled "Tim Geithner Fires Rick Wagoner, Still Happy With Vikram Pandit" that ended with this question: "How the heck does Vikram Pandit of Citigroup still have a job?"

And a poster at another investing blog, InformedTrades, wrote the following: "Glad that Obama can remove Wagoner but lets Pandit live and pays the AIG boys...Can you smell General Motorstroika?"

It's a head-scratcher. At the end of the day, it looks like failure in Detroit is being punished by the government -- as it should be now that taxpayers have a stake in GM. But that's not the case so far with Wall Street financial firms.

"I don't understand the thought process that it's OK to screw up a bank but it's not OK to screw up an automotive company," said Barry Ritholtz, CEO and director of equity research at research firm Fusion IQ. "You're telling one kid don't play with fire while the other kid is being given a pack of matches. There should be some consistency."

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Comments

The solutions that the Obama Adminstration

have proposed so far have not risen to the challenges that we face. Both the financial and auto crises require dramatic action that the Administration has resisted.

This lack of boldness has created this rightly perceived double standard.

Some may argue that it is not politically feasible but he is not in a good position right now. If he doesn't do enough to address this problem he loses. If a least tries to act boldly but fails he still loses but a least he tried.

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Not far from what would be expected from ...

... someone who's big splash pre-Presidential Race book could have been titled, The Audacity of Hope: and the Mediocrity of Policy. For every piece of good news ... a hope for rolling back Mountain Top Removal ... there is mediocre news ... about $200b of the stimulus wasted on tax cuts ... and a piece of bad news, mostly from the Finance Sector.

Indeed, about what one would expect from a "Hedge Fund Democrat".

A point that I made before the election, arguing for electing President Obama, was that absent a progressive populist to vote for, he was clearly a preferable opponent to have in the White House than John McCain.

And I still believe that ... but now that the election is past, its more important to focus on the "opponent" side of the question than the "preferable" side ... we have to build up momentum toward electing progressive populists to the House to tackle Wall Street head one, since if we do not, the radical reactionaries sure as hell will get plenty of faux-populists elected to try to baffle people with a new line of BS while dancing to the same corporate tune.

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speaking of politics

Even when a Politician is touting what sounds like good policy positions, they can get into office and "switch". The one I am think of is Jeff Merkley (D-OR). He campaigned against the bail out (with TV ads, railed on it), and also against his opponent for using illegal labor (huge TV ad campaign)....gets into the Senate and votes for the bail out and making sure employers cannot check to see if their employees have valid social security numbers (are legal to work).

I think you are right on the next election. I think there will be a backlash of furry and unfortunately there is no choice, once again stuck with no choice or least objectionable candidate. There are so many bad House members, gerrymandered into districts, no valid challenge in primaries either.

I really like your last line in your comment, about sums it up and this past election too.

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Stimulus, I just had a thought

All of this rhetoric about job creation with Stimulus...

why is it they couldn't kill two birds with one stone and fund GM to retool some of the plants and go into overdrive with producing electric vehicles?

GM is the one who removed the EV-1 (Who Killed the Electric Car) so they have the technology in house.

Why don't think direct some money to them, call it stimulus, put requirements all work, all jobs, raw materials (as much as possible) be U.S. citizens, made in the U.S.A. and call it a Stimulus?

How about a super cheap electric car or some sort of scooter combo for just running errands, about town?

Seriously, how many government agencies could use little mini-cars, or transport vehicles that were pure electric to get around short areas?

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