This editorial appeared in The (Tacoma) News Tribune.
The more the Big Three automakers plead for a federal bailout, the less convincing they get.
Their executives keep saying that the problem is the world, not them. And that the world depends on them. General Motors CEO Rick Wagoner told the U.S. Senate on Tuesday that only a $25 billion rescue package would "save the U.S. economy from a catastrophic collapse."
That increasingly looks like a risk worth taking.
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So far, the arguments against the bailout have been prevailing in Congress. That's because they're persuasive:
GM, Chrysler and Ford have been mismanaged for decades. With the possible exception of Ford under Alan Mullaly's leadership, they've dug themselves into a deep hole and may be past the point of no return. There is no guarantee whatsoever that $25 billion will save them; they could be back asking for another $25 billion in short order.
GM – the closest to bankruptcy – has been arguing that buyers would run away from its vehicles if they perceived that it had gone bust. But customers' concerns about promised warrantees, service, etc., could be addressed by pooling funds or obtaining federal guarantees to back those promises.
Chapter 11 allows for arrangements that keep companies alive. The idea is to restructure their debts and contract obligations to allow their survival. U.S. airlines have repeatedly been through Chapter 11 and emerged stronger.
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