Wednesday, October 17, 2012

AP Fact Checking Gets It Wrong On Romney's GM, Chrysler Bankruptcies: Auto Industry Would Have Been Saved By Romney Without Upsetting Established Bankruptcy Creditor Priorities: Obama's Auto Industry Bankruptcies With Union Favoritism Likely Frightened Post Recession Private Investment

From Planet Gore, "Debate: AP’s Fact-Free Auto Fact-Check" by Henry Payne:
Romney is correct that “the president took Detroit bankrupt.” The administration took both GM and Chrysler into Chapter 363 bankruptcy — a politicized bankruptcy criticized as "end-running the legal process" by at least one prominent legal expert – in order to benefit Big Labor special interests at the expense of bondholders, teacher and firefighter pensions, Delphi salaried employees, and so on.
AP’s claim that Romney’s "proposed [auto industry bankruptcy] path probably would have forced General Motors and Chrysler out of business" is not only contradicted by repeated statements by the candidate, but also by many industry experts. "Without government aid, both companies probably would have gone under and their assets sold in pieces," writes AP, getting its facts wrong about what Romney proposed.

"The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk," wrote Romney in the 2008 New York Times op-ed that Obama & AP caricature as a call for Detroit to die.
As a consequence, Obama's quickie bankruptcies of GM and Chrysler that favored unions over other higher priority creditors is likely responsible in part for the slowness of private investment after the recession and the slowness of the recovery.

From, "Are GM, Chrysler "End Running" Chapter 11?: Some critics say the automakers are structuring their bankruptcies as sales in an improper way." by
Alix Stuart - | US:
And that [Obama's union preferential GM, Chrysler bankruptcies] could scare off lenders in a wide variety of future situations, say some experts. "The reason America has always been the most welcoming place for loans is because everyone knows what their downside is, since we have the most well-established set of bankruptcy codes," said Peter Kaufman, president and head of restructuring and distressed M&A for the investment bank Gordian Group, in a recent teleconference sponsored by the American Bankruptcy Institute. "Now all that has been turned on its ear."
[Added Oct 24, 2012] Link to actual November 18, 2008, NY Times Op-Ed piece by Mitt Romney, "Let Detroit Go Bankrupt."

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