Critics say there’s a big difference between how President Obama is treating automakers versus the financial industry in terms of bailouts, but Iowa Senator Chuck Grassley says the president’s walking a fine line. General Motors and Chrysler’s reconstruction plans were rejected Monday by Obama — and the plans were needed for a combined $22-billion government bailout.
Grassley says it’s an issue of letting capitalism run its course. Grassley says, "When the government is intervening to make that point, it appears to a lot of people to appear to be a government running a private corporation and is that good? That’s the questions that are raised." Based on the latest actions, analysts believe G-M and Chrysler will surely face bankruptcy, a merger or both.
Grassley says that’s the way the system works. "It’s a balancing act between being good trustees of the taxpayers’ money when it’s given to corporations like General Motors and the extent to which you rely just simply upon the company to make the decision." Some in Detroit say Obama’s taking a "tough love" stance with automakers but has given banks and other financial operations billions.
G-M chairman Rick Wagoner is leaving the company, reportedly at the request of the White House. Grassley says, "When Wagoner goes, he goes because he was ineffective and that’s the way capitalism is supposed to work." Grassley says, "I made a decision on this back in December when I decided not to go for bailouts of the Big Three…and then the stimulus package and all the other things that tend to not be doing much good and putting a tremendous load upon future generations."
Grassley is taking part in a Senate Finance Committee hearing this morning that’s essentially a six-month update on the government bailouts, known as TARP. He was a key player in making sure a special inspector general be appointed to oversee the expenditure of TARP money — to protect the billions in taxpayer funds being spent.