The Bush administration is looking at "orderly" bankruptcy as a possible way to deal with the desperately ailing U.S. auto industry, the White House said Thursday as carmakers readied more plant closings and a half million Americans filed new jobless claims.
With General Motors, Chrysler and the rest of Detroit anxiously holding its breath and waiting for a federal rescue, White House press secretary Dana Perino said, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."
I do not know anyone who has bought a bankrupt product, or would purchase a car from a company that may not be in business the next day. Along with that, who would honor any bankrupt car company auto warranty? And we are not even talking about the many suppliers who are also on teetering on the brink here.
On Thursday, spokesmen for Chrysler, GM and Ford generally referred to their previous comments that bankruptcy was not a workable solution. The car companies argue that no one would buy a vehicle from a bankrupt company for fear that the company might not be around to honor warranties.
And with dismal unemployment numbers, Speaker Pelosi reminds Bush that we should act now.
House Speaker Nancy Pelosi said on Capitol Hill that grim new unemployment data heightened the urgency for the administration "to prevent the imminent insolvency of the domestic auto industry."
The California Democrat said Bush has the legal authority to act now, and should attach the accountability standards that were included in a $14 billion House-passed and Bush-supported carmaker bailout that died in the Senate last week. That plan would have given the government, through a Bush-appointed "car czar," veto power over major business decisions at any auto company that received federal loans.
And let us not forget that General Motors and Chysler will shut down all their plants for 30 days. That is a snowball effect on everyone from workers to suppliers, to anyone attached to the automotive industry. And let us be frank, it is not like anyone is questioning if GM or Chrysler will reopen again? Without bailout money, it is a possibility that they will not.
The little guy never gets a break.
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