Posted by
Michael Goodell on Monday, November 24, 2008 3:53:33 PM
Some years ago a a spurious bad debt popped up on the credit rating of a young acquaintance, blotting his good name. A company called TRW was handling his account, and after repeated unsuccessful efforts to navigate the bureaucracy, he finally cried out, “Now I know what TRW stands for–Turkeys Running Wild.”
This is also a good description of those in Washington tasked with picking winners and losers in the American economy. Today, after a quiet weekend tete-a-tete between executives and the US Treasury Department, the federal government shoveled another $20 billion dollars down Citigroup’s gaping maw, and promised to make good on another $300 billion or do of corporate debt. At no time during negotiations was the question raised as to how the Citigroup executives traveled to the meeting. No one stood up and publicly mocked or ridiculed them. No one called them incompetent, or stupid, or brain dead. No one demanded that they resign, or be fired, or be tarred and feathered and ridden out of town on a rail.
Thus the difference between Detroit auto manufacturers and New York banks. By all accounts, the CEO’s of Detroit Big Three, GM’s Rick Wagoner, Ford’s Alan Mulally, and Chrysler’s three-headed monster, Bob Nardelli, turned in a pathetic performance during Congressional hearings last week. They were, most emphatically, not ready for their close ups.
The question is, could they have been ready? The answer is no. Not if they expected to be treated with the sort of respect illegal aliens or terrorism-supporting Islamist groups routinely receive from Senators and Representatives. Watching the hearings, it was painfully clear they hadn’t been summoned to testify, they were there so each Senator and Representative could grandstand for the folks back home. “This one’s for you,” they seemed to be saying, to each of their constituents who had ever bought a lemon, or had a bad experience with a car dealer; which is just about everyone in the country.
It was also a chance to posture, preen and pose, as well as to demonstrate, not only an inability to stay informed about the crisis confronting American manufacturing, but an inability to read and comprehend the analyses compiled by their staffs.
One exchange effectively summed up the entire proceedings. New Jersey Senator Bob Menendez, while grilling Nardelli, asked how much cash Chrysler had burned in the first nine months of the year. Nardelli said, “We have $6.1 billion on hand now, which means we went through–“
Menendez interrupted to ask if that was how much Chrysler had on hand, or how much they went through. Nardelli attempted to respond, “On hand, but–“
“I don’t want to know how much you have on hand,” Menendez thundered. “I want to know how much you burned through.”
Nardelli’s mouth moved helplessly as he searched for a suitable response. Piling on, Menendez suggested surely as CEO Nardelli must know how much his company had spent. Clearly, Nardelli knew. In fact, he had been in the process of answering when Menendez began his Abu Ghraib routine.
The Big Three CEO’s looked so ill-prepared was because they were. They had come prepared to present facts, to make a case; they hadn’t come prepared for a public whipping. Maybe they should have expected a throw down. Maybe their inability to do so represents a certain naivete and a failure to do their homework. They looked distracted, confused and utterly at sea when repeatedly asked what plans they had to turn things around.
“What plans?” They surely wanted to scream. “What plans? Over the past four years we’ve driven the State of Michigan into an economic black hole through the implementation of our plans. We’ve laid off and bought out tens of thousands of blue- and white-collar employees, and closed dozens of plants while implementing our plans.”
They would have been right, but that really didn’t matter. They weren’t there to make a case. They were there to deliver a pound of flesh apiece. One day soon, after the blood’s been mopped up, and the chunks dried off and placed on the scale, they will get their bailout. It won’t be for them, but for the union employees still in their employ. Maybe the economy will turn around in time for them to start selling cars and trucks again, and the Big Three can lurch along until the next crisis.
In the meantime, maybe Detroit automakers will figure out they’re in the wrong business. Maybe they’ll relocate to a sexier address, and instead of just selling cars, they can figure out a way to spread the risk around. They can fob their sophisticated financial instruments off on the geniuses over at Citigroup and Merrill Lynch, and call them, say, Securitized Utilitarian Ventures, or SUV’s.
Sell enough of them, and maybe even Senator Menendez will treat them with respect.