Tough Love for Auto Makers but not for the Banks

On Monday President Obama basically threw two of the three US auto makers under a bus when he announced that GM and Chrysler were at the end of their credit line from the US Treasury. It just seemed off to me that the Wall Street con-men who fried the economy, still got billions in bonuses, and whose CEOs hardly got shoved around, got better treatment than the auto makers. Maybe I am not understanding this “tough love” concept I keep hearing about.

I do understand that there needs to be a systematic change in how the auto makers operate as a condition for help but I also believe there needs to be the same kind of changes to the banking industry that actually got us into this mess – like a return to some form of The Glass-Steagall Act and reform in the bank regulatory agencies to enforce existing laws. Also the leadership of the banks that approved the actions that led to the bust should be removed and in some cases the bad banks and AIG need to be wind down and broken up.

Instead we get the removal of the GM CEO and calls for Unions to trash their contracts in an effort to reduce their wages to the same level as workers at foreign owned factories in the US. GM was given 60 days to change and Chrysler was given 30 days to merge with another company.

I just don’t see the fairness of the treatment and yes I know the businesses aren’t the same, but seems to me to be like the guy who held and fired the gun is getting a special deal while the guy driving the get away car is getting the death sentence.

I subscribe to the John Rawls concept of justice – “According to Rawls, ignorance of these details about oneself will lead to principles that are fair to all. If an individual does not know how he will end up in his own conceived society, he is likely not going to privilege any one class of people, but rather develop a scheme of justice that treats all fairly.”

As Eugene Robinson wrote in his column:

Both the credit crunch and the reluctance of consumers to spend what money they have left are the direct result of Wall Street’s atrocious misbehavior. Yet the administration’s plan for rescuing the banking sector involves generous inducements, big subsidies and the opportunity for wealthy investors to become much wealthier while assuming very little risk. There are reasons for structuring the bank bailout this way, and there are reasons to take a get-tough attitude with the auto companies. But the juxtaposition is galling — and, for many autoworkers, potentially devastating. 

Detroit Dissonance

So where is the fairness in treatment? Where is the justice? 

Maybe I’m missing something?