Banking Industry Bail Outs Versus Auto Industry Bail Out

Saturday, April 4th, 2009 @ 9:44 am | Business, Communications, Republicans, US Politics, We Think

The big question pertaining to the economy among the YouThinkWhat staff is, “Why is the government forcing the auto industry to be accountable for the taxpayer dollars it has received, but the banks have been allowed to do whatever they wish with the corporate welfare money they’ve been given?”

We have had much discussion about the disparity of treatment of two industries. The chief executives in both the banking and the auto industries have made major mistakes in handling the money. Poor decisions abound.

We offer our explanation of the reason for the different treatment of the two major businesses.

Americans can understand what the auto industry produces. CARS. Americans understand the car manufacturers have provided employment for several generations of citizens to become middle class and to improve their way of life. Immigrant families, minorities and women have prospered from employment in the auto industry and its associated industries. Auto manufacturing is the backbone of American industry.

On the other hand with financial institutions, the banking industry, few people really understand what the banking industry produces. It’s too complicated to try to understand. That is why it is easier to just give them the money and not try to monitor what they do with it; because if we monitor their activities we would have little comprehension of what bankers are doing with our tax dollars and we would not be able to know when they are doing something wrong or foolish.

Besides, in the era of Obama, the rules of engagement have changed from the BushCo era where banks could do as they wish and no one questioned their activities.

Under the Obama administration banks must be accountable. They must open their records to government scrutiny if they wish to retain the bail out dollars. It is for this reason many banks, among them Bank of America, Citi-Group or Citi-Corp or whatever name they are going by these days; along with several other familiar smaller banking companies, are returning the money they received last fall.

We suspect the bankers have held the money just long enough to have invested and gotten a small return on the funds they received from taxpayers. Bankers often know where to get a good return on their investment. The profit part they will keep for themselves. Think of it as a short term loan with no interest paid to the government.

The long and the short of it is this: We know the auto manufacturers produce cars and pay union wages. There are many among us, rightly or wrongly, who blame unions for the condition of the American economy. Everyone who has ever owned an American made vehicle can tell of an unpleasant experience with a car dealership during the purchase or service to the car, truck, SUV, wagon or van .

Even though we know about excessive fees accessed by the banks on our accounts and transactions, none of us can accurately say what banks do. Can you say what product banks produce?

The banks have never been forced to tell us where they invest the money we give them or the results of those investments. We dare say there are millions of dollars in speculative, risky transactions made by U.S. banks that have been unsuccessful. As consumers we are not asking about them because we do not, for the most part know such transactions exist. We do not have a clue about them, and the banking officials are not telling us about them.

It’s kind of like when the spouse who’s been cheated on finds out they’ve been the sap. That is why President Obama can tell bankers: “My administration is the only thing between you and the pitchforks.”

It’s traditional to let the banks have their way. In Roman times the emperor went to extraordinary lengths to save the banks; but that is the difference.

While General Motors is the largest corporation in the world, $20 million was spent to send its CEO packing while sparing the institution from extinction. A more than adequate amount of money has been given to the banks to save those financial institutions. Save the banks. Ditch the bankers.

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