Treasury has said from the beginning that the TARP funds will follow two primary rules: (1) Treasury needs flexibility to adapt the allocation strategy according to market conditions, and (2) funds would only be allocated to industries or firms whose failure would cause a catastrophic meltdown in global economies.
It can be argued that US auto firms don’t qualify for rule #2. Their failure would affect thousands of jobs, but the auto industry globally is competitive, it’s just that the US auto firms are not competitive. So even this argument, if you take a longer look, is enough reason to exempt them from TARP funds. But if that’s not enough, consider this: all 3 major auto CEOs flew to DC on private jets to beg for TARP funds. That level of arrogance and lack of budgetary control is all the proof lawmakers need to decline their pleas for help.
Any lawmakers worried about political implications of not approving TARP funds for auto firms needn’t worry. No taxpayer in their right mind will support this. See Washington Post excerpts below:
There are 24 daily nonstop flights from Detroit to the Washington area. Richard Wagoner, Alan Mulally and Robert Nardelli probably should have taken one of them.
Instead, the chief executives of the Big Three automakers opted to fly their company jets to the capital for their hearings this week before the Senate and House — an ill-timed display of corporate excess for a trio of executives begging for an additional $25 billion from the public trough this week.
“There’s a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands,” Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. “It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn’t you all have downgraded to first class or jet-pooled or something to get here?”
The Big Three said nothing, which prompted Rep. Brad Sherman (D-Calif.) to rub it in. “I’m going to ask the three executives here to raise their hand if they flew here commercial,” he said. All still at the witness table. “Second,” he continued, “I’m going ask you to raise your hand if you’re planning to sell your jet . . . and fly back commercial.” More stillness. “Let the record show no hands went up,” Sherman grandstanded.