Bailout: What Could it Cost, When Will They End?by Tim Manni
Phil LeBeau, author of CNBC’s blog Behind the Wheel, provides his breakdown of what an automotive bailout could cost the Big Three:
Equity Stake in the auto companies?
Absolutely. Makes it easier to sell to angry constituents if Congress can say the U.S. will profit from a rebound in the auto stocks.
Fuel efficiency benchmarks?
Yes. The devil will be in the details, but Congress wants concrete benchmarks the Big 3 will have to meet in terms of fuel efficiency.
Maybe. Someone who will hold the Big 3 accountable to making the reforms that will be mandated. This position only works if the person appointed truly understands the auto industry and has the authority to come down on Detroit in a year or two if the Big 3 fall short of their commitment.
I doubt that will happen, nor do I think it should. Oh I know some of you will e-mail and say, “Hey, the Treasury department should boot these guys and bring in others to run these companies.”
Stipulations and restrictions are all very well and good, but where do the bailouts end? The government is entering into a very gray area. Federal funds have already been used to prop up American Express, and now possibly three more private companies in the Big Three:
“Where do you stop?” says Bill Isaac, former chairman of the Federal Deposit Insurance Corp and now managing director at the LECG global consulting firm in Vienna, Va. “Circuit City’s going down. Do we help them? What do you do if Starbucks gets in trouble? Do you help them?”
Readers: What should the government do — bailout Detroit or allow the Big Three to fail? Do private companies deserve bailouts?