Here comes the GOP primary, Michigan edition. And with it, media misinformation.
Exhibit A is the fiction that Mitt Romney “was willing to let (the American auto industry) just die” as President Obama repeatedly puts it in speeches — uncorrected by his MSM allies. Michigan is crucial to Obama’s fall reelection and Romney is a formidable obstacle. Solidifying a narrative that the GOP challenger is anti-autos is crucial, not just to mobilizing blue-collar voters but also swing, white collar voters whose jobs were saved by government intervention.
“Just like Mitt Romney, who wanted Detroit to go bankrupt, Newt Gingrich opposed the rescue loan that saved the U.S. auto industry and 1.4 million American jobs,” Obama spokesman Clark Pettig told the Detroit News this weekend.
Huh? Both Romney and Obama advocated bankruptcy for GM and Chrysler.
Both agreed on a “managed bankruptcy,” meaning the government would maintain financial lines of credit, honoring contracts in bankruptcy so that suppliers would keep operating. “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs,” Romney wrote in a 2008 New York Times op-ed that has been willfully distorted by Obama and his media minions.
Where Obama and Romney disagreed was on what type of bankruptcy.
Obama took GM and Chrysler into Chapter 363 — a creative interpretation of the bankruptcy code that sought to avoid the traditional Chapter 11 process so that the White House could dictate terms to favor preferred constituencies like Big Labor. The result was thuggish tactics (as reported by this scribe and largely ignored by Obama’s media allies) that threatened bondholders and shorted pension investors. While Chapter 363 bankruptcy allowed the automakers to emerge quickly from bankruptcy, it was hugely controversial in the legal community.
The government is “end-running the Chapter 11 process” by structuring the bankruptcies as sales, bankruptcy expert and UCLA Law Professor Lynn LoPucki told CFO magazine in June, 2009. Chapter 363 allowed both companies to get rid of liabilities without getting approval from their creditors. “It’s improper, because creditors are not getting the legal procedure allowed to them by Congress,” said LoPucki, who also teaches at Harvard, and who I sourced repeatedly during the Detroit bankruptcies.
By contrast, Romney opposed the initial “bailout” transfusions of cash from both the Bush and Obama administrations that kow-towed to unions and postponed crucial restructurings. He advocated immediately taking the companies into Chapter 11 via a managed bankruptcy, allowing management, creditors, and unions to work out terms while the government protected credit lines at a time when private credit markets were frozen. The result would likely have been more sustainable companies in the long haul — not Obama’s UAW bailout.
“Whether it was by President Bush or by President Obama, it was the wrong way to go,” Romney said at the Michigan presidential debate November. “The idea of billions of dollars being wasted initially, then finally they adopted the managed bankruptcy. I was among others that said we ought to do that.”
“Instead of a bailout, I favored ‘managed bankruptcy’ as the way forward. The course I recommended was eventually followed,” writes Romney in his Detroit News op-ed, correcting the record repeatedly distorted by the MSM. “But something else happened along the way that was truly egregious. By the spring of 2009, instead of the free market doing what it dos best, we got a major taste of crony capitalism, Obama-style.”
“I favored ‘managed bankruptcy’ as the way forward.” So much for the fiction of letting them “just die.” But in an election year, the MSM prefers Obama’s fiction to fact.