Steven Pearlstine, business columnist of the Washington Post, writes that Obama has offered a sensible solution to the Big Three Auto companies financial problems:
Then, in steps Obama with the utterly reasonable proposition, delivered in a television interview, that while the failure of General Motors, Chrysler and Ford posed as much of a risk to the economy as AIG and Freddie Mac, he wasn't about to provide three uncompetitive companies with a bridge loan to nowhere. As a condition of his support, he would require that all the constituencies -- the shareholders, creditors, workers, pensioners, managers and dealers -- make the necessary concessions needed to restructure these companies and put them on sustainable, competitive footing.
So what would such a rescue look like?
Several weeks ago, I suggested that the only way the government should get involved in a bailout was as part of a "prepackaged" bankruptcy that would result in a major restructuring of the automakers' finances and operations. Going through the bankruptcy process is a necessary legal step to wipe out the interests of current shareholders, replace failed executives and directors, force creditors to accept less than they are owed, abrogate labor contracts, reduce pension obligations and override state dealership laws. And by negotiating many of the details ahead of time, a "prepackaged" bankruptcy could be completed in a matter weeks or months, reducing the risk of scaring away people from buying new cars.
Just the kind of centrist solutions I was hoping for.
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