Why treat Big Auto differently from Big Money?
William Harrison at Yves place answers:
But, is [what's happening to the auto companies] not what should be happening with the big banks? Why the differential treatment here? Here's my take. I see two reasons.
First, the Obama Administration suffers from cognitive regulatory capture. [Ouch!] Former denizens of Wall Street are so ensconced in the Administration that they cannot but see events from a 'Wall Street perspective.' In effect, they operate like a horse with blinders. Their view takes as axiomatic the importance and needed continued existence of the big banks that they dismiss alternative workout solutions out of hand.
Second, the Obama Administration is well aware of rising populist sentiment. They understand that bailing out the big three automakers would weaken them politically as this would be seen as another outrageous subsidy to big business. However, Obama errs politically because the juxtaposition between his treatment of the big three and his treatment of the banks is obvious to everyone. the big three are seen as representing ordinary blue collar Americans. While the big banks are seen as Gordon Gekko-like rapers and pillagers of the robber baron class. This alone increases populist outrage at the administration. Effectively, Obama's unwillingness to deal with the banks in the same fashion earlier has put him in a lose-lose situation.
Politico, no doubt unwittingly, gives a fine example of cognitive regulatory capture in action:
The official added: “They have more confidence in the leadership on the banking side – that there are people in place who understand what went wrong and the steps necessary to deal with this disaster. They have no sense of confidence that the auto industry has the capacity or plans to structure a workout.”
Which is amazing, when you come to think about it, since last I checked, the automobile manufacturers haven't sucked up trillions of dollars in government money, but the banksters did. And the automobile manufacturers haven't ruined your 401(k) or devalued your house, but the banksters did. And the automobile manufacturers didn't crash the world economy, but the banksters did. So why in the name of sweet suffering Jeebus would anybody have an iota of confidence in the bankster leadership at all?
From a discourse perspective, this is nothing but a win, however: At last we're moving beyond CEOs, and their bonuses and personal quirks, and looking at systems, and so all the good work that Congress and the administration did in deflecting outrage onto a few whipping boys has been undone. What a shame.
NOTE Politico via Talk Left.
UPDATE Today's OFB line, signalled by Obama himself, is that since some of the CEOs are gone in both industries, then there's no differential treatement. That's a ludicrously bad argument, and if that's all they've got, we're in trouble. As industries, as systems, the two are being treated completely differently.
It's as if two repairmen came to fix your house: The plumber was late, and did a poor job, so there's a leak under the sink. The electrician burned your house down. What Obama's saying is that since you fired them both, they're the same. However, you're only going to sue the electrician. The Obama administration is suing the plumber.