This is such an . . . odd quote .. about the auto bailout in the NYT:

“Not since Harry Truman seized America’s steel mills in 1952 rather than allow a strike to imperil the conduct of the Korean War has Washington toyed with nationalization, or its functional equivalent, on this kind of scale. Mr. Obama may be thinking what Mr. Truman told his staff: “The president has the power to keep the country from going to hell.” (The Supreme Court thought differently and forced Mr. Truman to relinquish control.)”

Really?

You mean the biggest insurance company in the world (AIG) wasn’t just nationalized in September?

Or the largest holders of US mortgages — Fannie Mae and Freddie Mac, with $5.5 trillion in mortgage assets — weren’t just put into Conservatorship earlier the same month?

And I guess a $300 billion dollar commitment into Citibank, which is worth one tenth of that amount– that’s a major foray into the world of nationalization? Wasn’t the Fed $29B finance JPM’s buy of Bear Stearns a similar venture?

Here is the question I cannot figure out: Why are the automakers treated so differently than the banks? Why must they cancel their dividends, but not the banks? Shouldn’t they ALL have to change their bonus and exec comp structure, kill the divvies, and start behaving like responsible bailout recipients?

>

Source:
Washington Takes Risks With Its Auto Bailout Plans
DAVID E. SANGER
NYT, December 8, 2008

http://www.nytimes.com/2008/12/09/business/economy/09nationalize.html

U.S. seizes Fannie and Freddie
David Ellis
CNNMoney.com September 7, 2008: 8:28 PM EDT

http://money.cnn.com/2008/09/07/news/companies/fannie_freddie/index.htm

Category: Bailouts, Corporate Management, Dividends, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

52 Responses to “Why Are Banks So Different From Autos?”

  1. It’s only nationalization if they don’t beg for it?

  2. Mike M says:

    The banks have always been quazi-governmental enterprises. The banks are part of a club with the Fed being the president.

  3. km4 says:

    Because the massive US financial ponzi scheme to keep the bullshit US economy going where credit must flow like a raging river or America’s house of cards goes bust trumps everything else.

  4. HCF says:

    > Shouldn’t they ALL have to change their bonus and exec comp structure, kill the divvies, and start behaving like responsible bailout recipients?

    But Barry, that would be, ummm, logical… And if there is one thing the federal government absolutely cannot accept, it’s cold, hard logic!

    HCF

  5. BR,

    to your Q:

    if your Goal is De-Industrialization, then it makes Perfect Sense.

    we need to check our Premises..

  6. VoiceFromTheWilderness says:

    there are generally 3 things that people in the US government care about: votes, money, and intra-governmental relationships. Since the election just happened, votes are a great big yawner, but money never goes out of fashion. It is fairly well known that Finance has been making significant contributions on both sides of the aisle for quite some time. I’m less clear on whether auto’s did. So first guess: the Auto Co.s didn’t pony up at the contribution plate, so their baptisms are getting shoved to the back of the line. Next, it is extremely clear that the administration does not support the auto makers. Why? Well first of all there aren’t any auto folks in it’s ranks, and that is for sure, how this admin works. Conversely, the finance industry is well ensconced in this admin. Next the basic bias of the Republican party has been toward the most powerful and most wealthy actors in society. The car makers have been slipping for a long time, and do not represent the ‘east coast establishment’ or the oil folks, with their profits down and their deal making ability minimal, they are easy prey for bigger sharks playing their own game. Sharks with either the access or offices in the WH. The tension between the WH and congress on this issue makes it harder, more of an uphill battle, to get anything passed. This conflict is particularly important because, for definitely mysterious reasons, congress under both the republicans and the democrats, during the bush administration has more and more come to simply do the bidding of the executive. It was clear in the passage of the TARP legislation that congress has never recovered from the supine pose they established during the run to the Iraq invasion: ‘the president says it’s bad so it must be and we can’t find out anything on our own of course, we just have to believe him and give him everything he wants, and hope he can save little old us’. Since the president has not supported the auot bailout the congress is free to once again resume it’s heretofore legendary ability to jerk people around and demand answers. I have no idea why congress has become the timid lap dogs of the least popular, and least honest, administration in history. In a sense that is your real question. It is obvious that the treasury department, the fed, and the WH are participating in the looting of the national treasury for the benefit of an extremely small group of people. Why Congress regards this as a grand enterprise is anyone’s guess, but the answer is either: votes or money. My guess is money. That the finance industry contributed massively, well above other groups, to the Obama campaign is neither a secret nor a surprise, and may go toward understanding what is happening with regard to auto’s vs. finance as well.

  7. larster says:

    If the avg. American realized how screwed up the financial system is, there would be panic in the streets. Remember, we gave two terms to someone who is listing job creation as an example of his success in office.

  8. Mannwich says:

    @km4: You hit the nail on the head here. That’s really it. The game has to be kept going at all costs or the sucker’s going down. Everyone knows this……

  9. RW says:

    Financial firms are populated by (and directly useful to) the upper classes, automakers are middle and working class; all the rest is pretty much a matter of detail I would guess.

  10. Mannwich says:

    @larster: I think the “average American” is starting (however slowly) to realize this, which is why it IS different this time and true confidence in our system is going to be elusive for quite some time. The cat’s already out of the bag……..

  11. Mannwich says:

    @RW: Or as the folks at Naked Capitalism so aptly called it “the grubby Midwest”.

  12. AmenRa says:

    Here is the question I cannot figure out: Why are the automakers treated so differently than the banks? Why must they cancel their dividends, but not the banks? Shouldn’t they ALL have to change their bonus and exec comp structure, kill the divvies, and start behaving like responsible bailout recipients?
    YES.

    …but killing the divies would force the mutual funds to sell stocks because many of them only allow dividend paying stocks in their portfolio. So they should make all dividends .01 for any company involved in the bailouts. My .02

  13. Chad says:

    It’s quite simple…no former auto execs run the Fed or Treasury. If Bernanke or Paulson required the banks to make real cuts no one would hire them when they leave office. The senators on the other hand are just dumb and easily manipulated by the Fed and/or Treasury.

  14. VoiceFromTheWilderness says:

    By the way, I’d like to say how completely disingenous it is for people who love finance, and wall st. to complain about how ‘government never does anything right’. First of all, it shows you are a sucker: that meme was dreamed up by the spin-meisters who work for people who don’t want to be subject to regulation, the richest most powerful people in the world who think the world really ought to be run by them. Ever wonder why the corporations aren’t run as democracies? Buying into this meme has brought us the current crisis. The fact that you can sell a bunch of ranchers in Montana a line about ‘getting government off your back’ even as you create a massive police state is hilarious, but doesn’t make for intelligent discourse.

    But more importantly, from the Washington perspective, it has been extremely clear that Washington began to seriously breakdown when the money came to town. Not all that long ago Washington was a very sleepy, very low on the entertainment scale, town, having much more in common with a town in alabama than New York. All that changed when the ‘get the government off our back’ Reaganites came to town. Rapidly and with ever increasing strength, Washington became a money town — expensive restaurants, expensive clubs, limo’s everywhere, Constitution avenue shutdown for an Indian wedding (and no I don’t mean American Indian), high prices on everything, expensive stores packed together like sardines. Hey, don’t get me wrong, I like me some high end consumption. But please, lets try to be honest: Washington doesn’t work because the Republican party, and the business interests that own it, took control. This is not government failure, this is the failure of an ‘ideology’ (that’s actually nothing more than a lie in service of a power grab), which said that ‘might and money makes right’. And that the only thing that matters is the self interest of those able to muscle in on the decision. Bad news folks: they are wrong. How long it takes to find out how wrong they were, and how much damage has to be fixed to our culture, if it can be saved at all, that is what will determine a bottom.

  15. jason says:

    Chad has got it. Follow the money and how it connects to the players involved. It is all a crooked joke. It won’t change until the pitchforks and nooses come out.

  16. John says:

    Barry,

    Any company accepting government bailout money should be required to keep the following in place until the bailout money is paid back:

    * Pay no dividends on common stock

    * Pay all employees (executives, management, and workers) federal government wages with zero executive bonuses

    * Immediately return all executive bonuses paid during the past five years

    * Immediately return all compensation over $2.5 million accumulated over the past five years

  17. jason says:

    The whole country top to bottom, bottom to top take your pick is morally bankrupt to some degree. I see it every day in my small niche industry. The good projects go to those companies that do the most “entertaining”. Ninety percent of the time no one else is even allowed to bid but those that wine and dine the right people. Nothing is about quality, workmanship, or price and everything about who you know and how often you scratch their back.

    It is sick world and only the sickest survive.

  18. jlj says:

    Why are the banks so different from the autos?
    1) Elected officials feel they can understand the auto industry, they haven’t a clue about the financial industry. Imagine how the officials would look like trying to rake the financial execs over the coals about the CDO/Trading/leverage issues.
    2) People are pissed. Someone has to be punished. Auto execs and unions are a great strawmen.
    3) We haven’t nationalized the banking system, we have only reimbursed the banking system for all the executive bonuses taken out of the system since 1990!

  19. Namazu says:

    Surely your question is rhetorical. I’d add to the above:

    1) We bail out the banks because that’s where the campaign contribution money is.

    2) Bankers (broadly understood) are what most politicians secretly want to be when they grow up, and bankers are adept at flattering those aspirations while maintaining an aura of wizardry in the face of all evidence to the contrary.

  20. S Brennan says:

    It is a CLASS distinction with out a difference.

    Make a product that people need and someplace along the line you have manual labor…ew…icky.

    Palm a few bills off a stack of cash, kewl for you. How did this come about.

    Humans have always labored alongside parasitic sociopaths. If you look back in history, money lenders and merchants were not highly regarded. In fact, many laws originate primarily to restrict these activities. Babylonians, Jews, Han Chinese, Greeks, Romans and our founding fathers all placed severe penalties on those who went outside carefully prescribed boundaries.

    As recently as the late sixties, when I was a kid, a friends father did almost three years in prison for tax evasion, no chance to pay it off, certainly no tax amnesty, just prison for 3,000 dollars.

    Then along come the Anne Rand kids, Milton, Jarvis, Reagan and Greenspan, they tell us everything will be better if we just don’t pay taxes. Our government is bad, let’s drown it in a bath tub. They are not seen as traitors, but as liberators. They, the Robert Taylor’s of the world assure us a promised land like Sierra Leone will make us happy…and we go for it forgeting our recent past.

    23 November 1887
    The Thibodaux Massacre. The Louisiana Militia, aided by bands of “prominent citizens,” shot at least 35 unarmed black sugar workers striking to gain a dollar-per-day wage, and lynched two strike leaders.

    25 July 1890
    New York garment workers won the right to unionize after a seven-month strike. They secured agreements for a closed shop, and firing of all scabs.

    6 July 1892
    The Homestead Strike. Pinkerton Guards, trying to pave the way for the introduction of scabs, opened fire on striking Carnegie mill steel- workers in Homestead, Pennsylvania. In the ensuing battle, three Pinkertons surrendered; then, unarmed, they were set upon and beaten by a mob of townspeople, most of them women. Seven guards and eleven strikers and spectators were shot to death.

    11 July 1892
    Striking miners in Coeur D’Alene, Idaho dynamited the Frisco Mill, leaving it in ruins.

    1893
    The first of several bloody mining strikes at Cripple Creek, Colorado.

    5 July 1893
    During a strike against the Pullman Palace Car Company, which had drastically reduced wages, the 1892 World’s Columbian Exposition in Chicago’s Jackson Park was set ablaze, and seven buildings were reduced to ashes. The mobs raged on, burning and looting railroad cars and fighting police in the streets, until 10 July, when 14,000 federal and state troops finally succeeded in putting down the strike.

    1894
    Federal troops killed 34 American Railway Union members in the Chicago area attempting to break a strike, led by Eugene Debs, against the Pullman Company. Debs and several others were imprisoned for violating injunctions, causing disintegration of the union.

    21 September 1896
    The state militia was sent to Leadville, Colorado to break a miner’s strike.

    10 September 1897
    19 unarmed striking coal miners and mine workers were killed and 36 wounded by a posse organized by the Luzerne County sherif for refusing to disperse near Lattimer, Pennsylvania. The strikers, most of whom were shot in the back, were originally brought in as strike-breakers, but later organized themselves.

    1898
    A portion of the Erdman Act, which would have made it a criminal offense for railroads to dismiss employees or discriminate against prospective employees based on their union activities, was declared invalid by the United States Supreme Court.

    12 October 1898
    Fourteen were killed, 25 wounded in violence resulting when Virden, Illinois mine owners attempted to break a strike by importing 200 nonunion black workers.

    29 April 1899
    When their demand that only union men be employed was refused, members of the Western Federation of Miners dynamited the $250,000 mill of the Bunker Hill Company at Wardner, Idaho, destroying it completely. President McKinley responded by sending in black soldiers from Brownsville, Texas with orders to round up thousands of miners and confine them in specially built “bullpens.”

    1899 and 1901
    U.S. Army troops occupied the Coeur d’Alene mining region in Idaho.

    12 October 1902
    Fourteen miners were killed and 22 wounded by scabherders at Pana, Illinois.

    23 November 1903
    Troops were dispatched to Cripple Creek, Colorado to control rioting by striking coal miners.

    July 1903
    Labor organizer Mary Harris (“Mother”) Jones leads child workers in demanding a 55 hour work week.

    23 February 1904
    William Randolph Hearst’s San Francisco Chronicle began publishing articles on the menace of Japanese laborers, leading to a resolution of the California Legislature that action be taken against their immigration.

    8 June 1904
    A battle between the Colorado Militia and striking miners at Dunnville ended with six union members dead and 15 taken prisoner. Seventy-nine of the strikers were deported to Kansas two days later.

    17 April 1905
    The Supreme Court held that a maximum hours law for New York bakery workers was unconstitutional under the due process clause of the 14th ammendment.

    1908
    The Erdman Act was further weakened when Section 10 was declared unconstitutional. This section had made it illegal for railroad employers to fire employees for being involved in union activities (see 1898).

    22 November 1909
    The “Uprising of the 20,000.” Female garment workers went on strike in New York; many were arrested. A judge told those arrested: “You are on strike against God.”

    25 December 1910
    A dynamite bomb destroyed a portion of the Llewellyn Ironworks in Los Angeles, where a bitter strike was in progress.

    1911
    The Supreme Court ordered the AFL to cease its promotion of a boycott against the Bucks Stove and Range Company. A contempt charge against union leaders (including AFL President Samuel Gompers) was dismissed on technical grounds.

    25 March 1911
    The Triangle Shirtwaist Company, occupying the top three floors of a ten-story building in New York City, was consumed by fire. One hundred and forty-seven people, mostly women and young girls working in sweatshop conditions, lost their lives. Approximately 50 died as they leapt from windows to the street; the others were burned or trampled to death as they desperately attempted to escape through stairway exits locked as a precaution against “the interruption of work”. On 11 April the company’s owners were indicted for manslaughter.

    2 December 1911
    A Chicago “slugger,” paid $50 by labor unions for every scab he “discouraged,” described his job in an interview: “Oh, there ain’t nothin’ to it. I gets my fifty, then I goes out and finds the guy they wanna have slugged. I goes up to `im and I says to `im, `My friend, by way of meaning no harm,’ and then I gives it to `im — biff! in the mug. Nothin’ to it.”

    24 February 1912
    Women and children were beaten by police during a textile strike in Lawrence, Massachusetts.

    18 April 1912
    The National Guard was called out against striking West Virginia coal miners.

    11 June 191?
    Police shot three maritime workers (one of whom was killed) who were striking against the United Fruit Company in New Orleans.

    5 January 1914
    The Ford Motor Company raised its basic wage from $2.40 for a nine hour day to $5 for an eight hour day.

    20 April 1914
    The “Ludlow Massacre.” In an attempt to persuade strikers at Colorado’s Ludlow Mine Field to return to work, company “guards,” engaged by John D. Rockefeller, Jr. and other mine operators and sworn into the State Militia just for the occasion, attacked a union tent camp with machine guns, then set it afire. Five men, two women and 12 children died as a result. Additional web resources are catolged at http://www.holtlaborlibrary.org/ludlow.html#Web%20Sites.

    13 November 1914
    A Western Federation of Miners strike is crushed by the militia in Butte, Montana.

    19 January 1915
    World famous labor leader Joe Hill was arrested in Salt Lake City. He was convicted on trumped up murder charges, and was executed 21 months later despite worldwide protests and two attempts to intervene by President Woodrow Wilson. In a letter to Bill Haywood shortly before his death he penned the famous words, “Don’t mourn – organize!”

    On this same day, twenty rioting strikers were shot by factory guards at Roosevelt, New Jersey.

    25 January 1915
    The Supreme Court upholds “yellow dog” contracts, which forbid membership in labor unions. 22 July 1916
    A bomb was set off during a “Preparedness Day” parade in San Francisco, killing 10 and injuring 40 more. Thomas J. Mooney, a labor organizer and Warren K. Billings, a shoe worker, were convicted, but were both pardoned in 1939.

    19 August 1916
    Strikebreakers hired by the Everett Mills owner Neil Jamison attacked and beat picketing strikers in Everett, Washington. Local police watched and refused to intervene, claiming that the waterfront where the incident took place was Federal land and therefore outside their jurisdiction. (When the picketers retaliated against the strikebreakers that evening, the local police intervened, claiming that they had crossed the line of jursidiction.)

    Three days later, twenty-two union men attempted to speak out at a local crossroads, but each was arrested; arrests and beatings of strikebreakers became common throughout the following months, and on 30 October vigilantes forced IWW speakers to run the gauntlet, subjecting them to whipping, tripping kicking, and impalement against a spiked cattle guard at the end of the gauntlet. In response, the IWW called for a meeting on 5 November. When the union men arrived, they were fired on; seven people were killed, 50 were wounded, and an indeterminate number wound up missing.

    7 September 1916
    Federal employees win the right to receive Worker’s Compensation insurance.

    12 July 1917
    After seizing the local Western Union telegraph office in order to cut off outside communication, several thousand armed vigilantes forced 1,185 men in Bisbee, Arizona into manure-laden boxcars and “deported” them to the New Mexico desert. The action was precipitated by a strike when workers’ demands (including improvements to safety and working conditions at the local copper mines, an end to discrimination against labor organizations and unequal treatment of foreign and minority workers, and the institution of a fair wage system) went unmet. The “deportation” was organized by Sheriff Harry Wheeler. The incident was investigated months later by a Federal Mediation Commission set up by President Woodrow Wilson; the Commission found that no federal law applied, and referred the case to the State of Arizona, which failed to take any action, citing patriotism and support for the war as justification for the vigilantes’ action.

    1 August 1917
    IWW organizer Frank Little was lynched in Butte, Monatana.

    5 September 1917
    Federal agents raided the IWW headquarters in 48 cities.

    3 June 1918
    A Federal child labor law, enacted two years earlier, was declared unconstitutional. A new law was enacted 24 February 1919, but this one too was declared unconstitutional on 15 May 1922.

    27 July 1918
    United Mine Workers organizer Ginger Goodwin was shot by a hired private policeman outside Cumberland, British Columbia.

    26 August 1919
    United Mine Worker organizer Fannie Sellins was gunned down by company guards in Brackenridge, Pennsylvania.

    22 September 1919
    The “Great Steel Strike” began. Ultimately, 350,000 steel workers walked off their jobs to demand union recognition. The AFL Iron and Steel Organizing Committee called off the strike on 8 January 1920, their goals unmet.

    11 November 1919
    The Centralia Massacre. Violence erupted when members of the American Legion attempted to force their way into an IWW hall in Centralia, Washington during an Armistice Day anniversary celebration. Four Legionnaires were shot dead by members of the IWW, after which IWW organizer Wesley Everest was lynched by a local mob.

    22 December 1919
    Amid a strike for union recognition by 395,000 steelworkers (ultimately unsuccessful), approximately 250 “anarchists,” “communists,” and “labor agitators” were deported to Russia, marking the beginning of the so-called “Red Scare.”

    2 January 1920
    The U.S. Bureau of Investigation began carrying out the nationwide Palmer Raids. Federal agents seized labor leaders and literature in the hopes of discouraging labor activity. A number of citizens were turned over to state officials for prosecution under various anti-anarchy statutes.

    19 May 1920
    The Battle of Matewan. Despite efforts by police chief (and former miner) Sid Hatfield and Mayor C. Testerman to protect miners from interference in their union drive in Matewan, West Virginia, Baldwin-Felts detectives hired by the local mining company and thirteen of the company’s managers arrived to evict miners and their families from the Stone Mountain Mine camp. A gun battle ensued, resulting in the deaths of 7 detectives, Mayor Testerman, and 2 miners. Baldwin-Felts detectives assasinated Sid Hatfield 15 months later, sparking off an armed rebellion of 10,000 West Virginia coal miners at “The Battle of Blair Mountain,” dubbed “the largest insurrection this country has had since the Civil War” by The Battle of Matewan Home Page.

    1920 and 1921
    Army troops were used to intervene against striking mineworkers in West Virginia.

    22 June 1922
    Violence erupted during a coal-mine strike at Herrin, Illinois. Thirty-six were killed, 21 of them non-union miners.

    2 June 1924
    A child labor ammendment to the U.S. Constitution was proposed; only 28 of the necessary 36 states ever ratified it.

    14 June 1924
    A San Pedro, California IWW hall was raided; a number of children were scalded when the hall was demolished.

    1926
    Textile workers fought with police in Passaic, New Jersey. A year-long strike ensued.

    21 November 1927
    Picketing miners were massacred in Columbine, Colorado.

    14 April 1930
    Over 100 farm workers were arrested for their unionizing activities in the federally subsidized Imperial Valley, California. Eight were subsequently convicted of `criminal syndicalism.’

    4 May 1931
    Gun-toting vigilantes attack striking miners in Harlan County, Kentucky.

    7 March 1932
    Police kill striking workers at Ford’s Dearborn, Michigan plant.

    10 October 1933
    18,000 cotton workers went on strike Pixley, California. Four were killed before a pay-hike was finally won.

    1934
    The Electric Auto-Lite Strike. In Toledo, OH, two strikers were killed and over two hundred wounded by National Guardsmen. Some 1300 National Guard troops, including included eight rifle companies and three machine gun companies, were called in to disperse the protestors.

    1934
    International Longshoremans and Warehouse union strike of 1934. Two longshoremen, Nick Bordoise and Howard Sperry, were shot to death by the San Francisco Police.

    1 September – 22 September 1934
    A strike in Woonsocket, RI, part of a national movement to obtain a minimum wage for textile workers, resulted in the deaths of three workers. Over 420,000 workers ultimately went on strike.

    9 November 1935
    The Committee for Industrial Organization (CIO) was formed to expand industrial unionism.

    11 February 1937
    General Motors recognizes the United Auto Workers union following a sit-down strike.

    26 May 1937
    The ‘Battle of the Overpass’. Walter Reuther and a group of UAW supporters, fresh from having organized GM and Chyrsler, attempting to distribute leaflets at Gate 4 of the Ford Motor Company’s River Rouge plant, and were beaten up (together with bystanders) by Ford Service Department guards.

    30 May 1937
    Police killed 10 and wounded 30 during the “Memorial Day Massacre” at the Republic Steel plant in Chicago.

    25 June 1938
    The Wages and Hours (later Fair Labor Standards) Act is passed, banning child labor and setting the 40-hour work week. The Act went into effect in October 1940, and was upheld in the Supreme Court on 3 February 1941.

    27 February 1939
    The Supreme Court rules that sit-down strikes are illegal.

    20 June 1941
    Henry Ford recognizes the UAW.

    15 December 1941
    The AFL pledges that there will be no strikes in defense-related industry plants for the duration of the war.

    28 December 1944
    President Franklin D. Roosevelt ordered the Army to seize the executive offices of Montgomery Ward and Company after the corporation failed to comply with a National War Labor Board directive regarding union shops.

    1946
    Workers in packinghouses nation-wide went on strike.

    1 April 1946
    A strike by 400,000 mine workers in the U.S. began. U.S. troops seized railroads and coal mines the following month.

    4 October 1946
    The U.S. Navy seized oil refineries in order to break a 20-state post-war strike.

    20 June 1947
    The Taft-Hartley Labor Act, curbing strikes, was vetoed by President Truman. Congress overrode the veto.

    20 April 1948
    Labor leader Walter Reuther was shot and seriously wounded by would-be assassins.

    27 August 1950
    President Truman ordered the U.S. Army to seize all the nation’s railroads to prevent a general strike. The railroads were not returned to their owners until two years later.

    8 April 1952
    President Truman ordered the U.S. Army to seize the nation’s steel mills to avert a strike. The act was ruled to be illegal by the Supreme Court on 2 June.

    5 December 1955
    The two largest labor organizations in the U.S. merged to form the AFL-CIO, with a membership estimated at 15 million.

    14 September 1959
    The Landrum-Griffin Act passes, restricting union activity.

    7 November 1959
    The Taft-Hartley Act is invoked by the Supreme Court to break a steel strike.

    http://www.lutins.org/lobor.html

  21. Winston Munn says:

    “Here is the question I cannot figure out: Why are the automakers treated so differently than the banks?”

    Warning, warning, warning. Repeated attempts to answer this question will lead to sitting in a dark room in front of a computer monitor with a tin-foil hat on your head.

  22. David Merkel says:

    Barry, I agree… no divs if you take bailout cash. I suspect Congress treats financials as a “black box” that they only dimly understand. The auto companies are simpler for them, and have been more obviously badly run. They also have no cheerleader, such as Bernanke and the regulators.

    I say cheerleader because the interests of the management and regulators are aligned here to tell the story,

    “These are successful firms that have gotten harmed by an adverse economic environment that no one could have seen coming,”

    instead of,

    “We profited during the boom underwriting cruddy debts, and now we get our heads handed to us when the credit cycle turned.”

    The automakers have few strong patrons. The financial services companies have many friends on both sides of the aisle in Congress, and in the new and old Administrations. Thus the difference in treatment.

  23. David Merkel says:

    One more note: the regulators tell the banks story for them because they don’t want to admit that they didn’t regulate them effectively. An aside, score one for state-based insurance regulation — they did a better job, especially for life and P&C. AIG failed, but its opcos are intact.

  24. Gloomy says:

    Barry,
    I find this a fascinating topic and I have posed this exact question to numerous people over the past few weeks at holiday parties. The answer is always the same. They have no idea why banks should be granted special privelege, but the fiancial world is too complex for them to understand and they have been told by their leaders that banks must be bailed out. America’s sheeples are being fleeced. This is financial rape on a never before seen scale. Transparency should be required. All insolvent banks should file for bankruptcy. If necessary the government should temporarily go into the business of lending directly to credit worthy individuals and corporations at a rate somewhat above the prevailing rate in the private sector until the private sector can take over.

  25. bonghiteric says:

    There is no Department of American Made Cars onto which Congress can lay off the responsibility for Detroit’s mess as they’ve done to the Fed and Treasury with Wall Street’s dysfunction.

  26. DL says:

    Banks versus autos.

    The current preferences will likely be altered under Obama.

    However, I think there are more bank bailouts in our future.

  27. patient renter says:

    Why are the automakers treated so differently than the banks?

    Because campaign contributions from banks are all that much juicier!

  28. mkkby says:

    RW is correct about bankers being upper class, ivy league, while autos are working class.

    The less cynical argument is under fractional reserve lending, the whole house of cards comes down if only 10% of depositors close their accounts. Americans would be living in basements with loaded guns if they knew that.

  29. patient renter says:

    A quick followup to my comment – opensecrets.org tells you everything you need to know about why investment/banking/finance is treated better than automotive. Follow the money:

    http://www.opensecrets.org/industries/mems.php

  30. jonpublic says:

    While I disagree with the notion that the auto companies should file for bankruptcy, I’m very glad the double standard its being recognized. I definitely think the banks should be held to the same standard that auto companies are being held to now.

  31. TC says:

    This “live” autopsy of the Autos while Financials get hundreds of billions and a free pass is just one more vivid example why no young person in their right mind would go into manufacturing. Why endure this grilling when you can just scoop up crumbs off the floor and wash them down with Cristal?

  32. DL says:

    Entrepreneurship in action. The Illinois governor caught trying to sell Obama’s Senate seat:

    http://online.wsj.com/article/SB122883415161091395.html

  33. momoso says:

    Simple: Unions and Foreign factories in the (Republican) South:

    http://tinyidea.wordpress.com/2008/12/02/detroit-bailout-debate-99-misinformation/

  34. DL says:

    TC @ 1:14

    When times are good, Wall Street is the place to be.

    But during bear markets, mechanical engineers have the edge over the “financial engineers”

  35. gloppie says:

    Why are Banks different from Autos ?
    I’ll tell you why;
    when you bail out Banks, you bail out greed, malfeasance and the DESTRUCTION of wealth, by the scum of the earth that in the end is in charge of everything.
    when you bail out Autos, you bail out FACTORIES where good people assemble products and CREATE wealth, and in the end have no say in society.

    Does that answer your question ?

  36. jrhyno says:

    Well, of course most of us reading this has asked the very question that Barry has posed:

    “Here is the question I cannot figure out: Why are the automakers treated so differently than the banks?”

    I think that the whole scale of the difference is mind-boggling as well. Barry has noted several times the true cost of the whole financial system bailout (several trillion always ratchetting upwards), vs. a petty 15 $ billion (or 35, but who cares, it’s a tiny number in comparision) for the auto companies.

    I’ll weigh in with 2 quick observations:

    1) Congress seems to be dictating that one of the changes that the automakers must address is the milage that their fleets get, and a move towards hybrids. I find this humorous on several levels.

    With gas at a “reasonable” $1.65 per gallon, the public appetite for paying a premium for a hybrid seems to have waned. I fully expect that gas and oil prices will again rise, timeframe unknown, and that hybrids or electrics are the way to go. Obama has been given a gift of low oil prices, the time to really encourage vehicles that get great milage is here.

    Didn’t the congress for years never mandate an increase in the CAFE standards? Wouldn’t this have been a way to “encourage” the automakers to do what they should have been doing all along, IN a climate of higher gas prices?

    Lastly, the latest sales figures of the big 3 are all WAY down. They need to build cars that we’ll buy!! But wait, if you look at sales figures from Toyota and Honda, they are down a comparable amount. Apparently Americans aren’t buying their cars either. Could it be that at this point in time, it’s not the type of car out there, but perhaps that either the consumer has pulled way back, or that he/she can’t get financing?

    2) I’m in favor of the auto bailout, if for no other reason that the big 3 actually make something in the country. It’s one of the few products that is still indeed made here. And according to JD Powers, initial quality is comparable or superior to Toyota and Honda.

    Anyway, there are my .20c (yes, .20 vs. .02) worth of insight.

    Disclosure, Long Honda (2003 Civic Hybrid), Long Subaru (2007 Forrester), Long Volkswagon (95 Cabrio), Long GM (67 Camaro Conv., in dire need of restoration).

  37. TrickStar says:

    I wrote a longer opinion but then erased it because in the end Chad is right.

  38. wally says:

    “Why are the automakers treated so differently than the banks?”

    The answer is obvious, isn’t it? Pals, cronys, connections, past history…. money, money, money. The policies of the US government are openly for sale, just do it smoothly so you don’t come off looking like Illinois.

  39. Robertm73 says:

    Why? Easy, we know autos, we have heard about them for so long we are all experts. Who remembers the Chrsyler Bailout in the 80′s? One of the single greatest trades the government did. Since then we have thought bailouts should pay us back. that is why the TARP was sold as a pay back and why the autos are so tuff. We know they are screwed, we know the workers are overpaid, we know the retiee’s have it better. So the auto bailout will not pay. But the better question is if we bail them out where do they go?

  40. S Brennan says:

    As an Engineer DL, this post is one of the least informed I’ve ever seen. Mechanical Engineers are only needed for manufacture…if you don’t make anything you don’t need engineers.

    DL Says:
    December 9th, 2008 at 1:54 pm

    TC @ 1:14

    When times are good, Wall Street is the place to be.

    But during bear markets, mechanical engineers have the edge over the “financial engineers”

  41. doug says:

    Why are the automakers treated so differently than the banks?

    My $0.02: It is not just the politicians who are not giving out $ to car folks. Most people I know and talk to about the bailouts are more pissed at the car companies than the banks. Why? Perhaps many people understand that car makers have been doing the same thing wrong for a long time, telling us that people ‘don’t want small cars’, while in fact, the car makers didn’t want them because the profit was astronomically better on big cars. They spent millions advertising ‘big cars’, lobbying to reduce CAFE and even getting there biggest profit makers not included in the CAFE and very little doing anything for little cars. Same old same old, in the face of an easy to see that the world is changing environment. Sales did not just plummet. They have been loosing market share for years and not doing anything different.
    At least the banksters were ‘innovating’. Gov’t could have reigned them in and did not. Don’t get me wrong the banksters suck, but the car guys suck even more….

  42. DL says:

    S Brennan @ 3:20

    “As an Engineer DL, this post is one of the least informed I’ve ever seen. Mechanical Engineers are only needed for manufacture…if you don’t make anything you don’t need engineers”

    Are you really saying the U.S. doesn’t make anything, or at least that the U.S. makes nothing outside of the auto sector?

    I find that hard to believe. Furthermore, there must be a lot of engineers that are hired in the U.S. to create new products, which products are then produced in Asia.

    I’m not saying that everyone is necessarily falling all over themselves to hire mechanical engineers at the moment, only that the situation for engineers is probably better than for MBA’s seeking employment (at the moment) with investment banking firms.

  43. jessica says:

    The fact that banks are treated with such deference and manufacturing companies pissed all over is a big part of how we got in this mess in the first place.
    (It is not about relative competence. The Big 3 had a bad hand and played it poorly. The banks had a great hand but screwed up anyway.)

  44. ap says:

    Yeah, why aren’t any Bailout Bank CEOs having to accept 1$ a year, No Bonuses, No other compensations. Like they didn’t pillage enough in the last few years – like Paulson with the obscene payout of over $500 Million.

    SBrennan – thank you for that shocking history of actions against workers. Very sad.

    I really hope we can find a way to get rid of the obscene influence that the financial industry has on governing. But yes, that means finding a way to get rid of GREED.

  45. DL says:

    doug @ 3:27 “

    “the banksters suck, but the car guys suck even more….”

    I think that pretty well sums it up.

  46. S Brennan says:

    DL give it a rest,

    You truly know nothing about engineering:

    “U.S. motor vehicle parts suppliers comprise the nation’s leading manufacturing sector, contributing to 4.5 million jobs nationwide and providing more jobs than any other sector in seven states, according to findings of a landmark study of the industry by the Center for Automotive Research (CAR) for the Motor & Equipment Manufacturers Association (MEMA). ”

    And as for manufacture worldwide…you should study up before you let fly, because plants are shutting down across the globe

  47. fratastic says:

    Barry, in the recent Citigroup term sheet. It specifically states that Citigroup can not pay dividends greater than one. Direct quote from the term sheet is below.

    Dividends: Institution is prohibited from paying common stock dividends, in excess
    of $.01 per share per quarter, for 3 years without UST/FDIC/FRB consent.
    A factor taken into account for consideration of the USG’s consent is the
    ability to complete a common stock offering of appropriate size.

  48. Pat G. says:

    Having worked for the state, I know that there are several hundred rules that welfare recipients must abide by because they receive goverment assistance. Why doesn’t the same hold true for banks, autos or any other company who receives goverment assistance?

  49. One is well-advised to study the rise of fascism in Europe and brace yourself for such chilling similarities as finds financiers possessing dogmas largely originating in the City of London, consolidating political control, building global cartels, while at the same time gutting labor.

    Believe it or not, there was a U.S. President who saw this coming…

    “One of the great American industrialists of our day—a man who has rendered yeoman service to his country in this crisis—recently emphasized the grave dangers of “rightist reaction” in this Nation. All clear-thinking businessmen share his concern. Indeed, if such reaction should develop—if history were to repeat itself and we were to return to the so-called “normalcy” of the 1920’s—then it is certain that even though we shall have conquered our enemies on the battlefields abroad, we shall have yielded to the spirit of Fascism here at home.”
    – FDR, 1944 State of the Union Address

    This year’s blatant hijacking of the U.S. Treasury stands as a watershed event in that an opportunity to assert the principles put forward by this nation’s founders in opposition to tyranny has been squandered. Just how far removed we are from being anything remotely resembling the nation we were formed to be is dramatically revealed by the contrast you make, Barry, pitting the treatment given financiers versus industry in this grave moment of bankruptcy whose political manifestation is most disgusting of all…

  50. roylat says:

    There is no mystery about the different treatment of financial and manufacturing firms. Political power in our country is tightly tied to the economic and profit contribution of a sector. For the last 50 years, the finance sector has been growing and the manufacturing sector has been declining, with the trends accelerating hugely since the early 1990s. Kevin Phillips shows it graphically in “American Theocracy.”

    By 2005, Financials accounted for roughly 40% of corporate profits; manufacturing for roughly 5%. The purchase of politicians tracked these lines. Both parties had become captives of the financial industry, doing their bidding, doing away with regulation, and bailing them out whenever excesses created mini-collapses (all those bailouts that occurred over the years prior to the BIG Bailout of today) The Treasury and the Federal Reserve are staffed by members of the financial establishment; they believe in the supreme importance of finance. The Executive and the Congress are both captives of the financial sector. Except for the Congressmen from Michigan, none of the politicians are indebted to the automobile companies. All of this is manifest in the relative treatment of Citigroup and General Motors.

    Now that financial profits have collapsed and a President has been elected who is not in their pocket, there may be a shift in political priorities — but not a guarantee. Obama’s advisers are heavily drawn from the financial sector, educated by universities whose professors have bought into (or been bought by) the paradigm that holds finance to be the king of all endeavors, who genuinely believe that ensuring the survival of the big financial firms is necessary for the good of all. But, there is an opening now, and hopefully some alternative voices will get through. Obama’s continued emphasis on Main Street suggests that some have.

  51. Bonesetter Brown says:

    Wall St and Washington are two sides of one coin. Washington’s bail out of Wall St. is an act of self-preservation. No such imperative exists for the domestic auto industry.

    The industrial sector that will receive a bail out (after a fashion) is the Chinese manufacture-for-export sector. As the Chinese de-value their currency against USD in the coming year, watch for the non-response out of Washington. Quid quo pro for the increase in Chinese-purchased debt needed to fund the Washington/Wall St. rescue plan.

  52. pseudonymous in nc says:

    I think Jon Stewart’s take has more truth in it than any professional commentator would care to admit: that’s to say, Congresscritters think they know what the Big Three do, and feel qualified to pontificate about it, but don’t have a clue what Wall Street actually does.

    There are class considerations, as well as long-standing traditional rivalries here between the Union and the Confederight-to-work states.