Imagine if General Motors CEO Rick Wagoner called up Mary Peters (Secretary of Transportation, for those unfamiliar with the invisible half of the Bush Cabinet) on a Friday evening and said, “Psssttt. We’re in trouble. We need money. Can you help?” And then, a couple of days later, there was a middle-of-the-night announcement detailing billions in bailout funds for the foundering automaker.
That’s effectively what has happened with Citigroup, AIG, and several other huge companies that managed to arrange rapid-fire rescue packages from the government through a weekend’s worth of negotiations. Except instead of the Transportation Secretary, they’ve been dealing directly with Treasury Secretary Hank Paulson, a fellow banker with a CEO’s push-it-through mentality.
The chief executives of GM, Ford, and Chrysler are obviously undergoing a much more arduous public flogging as they plead for help, sitting through hours of televised Congressional hearings where they have to atone for their mistakes and explain why this time, it’s different. It’s fascinating. And uncomfortable. And maybe this is how we should have been doing it all along.
Compare what the Detroit CEOs are going through to the travails of their Wall Street colleagues, and there’s a startling lack of proportionality. For a starter fund of $34 billion, the automakers have each submitted a fairly detailed “viability plan” to Congress, with public versions available to any taxpayer with an Internet connection. GM in particular has laid out its problems in plain English, in a way that’s helpful to anybody trying to decide if the company deserves help, or not.
Members of Congress are asking some pretty good questions, too – like how do we know this will actually solve anything? And since the whole ordeal is unfolding in slow-motion – compared to $300 billion in backing for Citigroup, $150 billion for AIG, and billions more for some banks we don’t even know about yet – taxpayers are calling up Congress and weighing in. Many are skeptical, with a high degree of opposition. Even if there is a bailout in the end, feedback from voters puts members of Congress on notice and gives them better standing to exact tough terms from anybody who gets a federal lifeline.
From now on, let’s give the same treatment to any other CEO who insists there will be Armageddon if his company doesn’t get a bailout – and do it BEFORE handing out the money, not after. It would be nice to see a public, 30-page report from Citigroup CEO Vikram Pandit explaining what would happen to his bank – and the economy – without taxpayer largesse. And how about a concise public explanation from AIG about how what was once the world’s premier insurance firm gagged so badly on credit-default swaps – a kind of insurance! – that it basically needs a bottomless government loan to keep from wiping out half the world’s financial system.
Oh, and when these masters of finance come to Washington, let’s make sure they drive themselves in Everyman fashion, enduring the same traffic and potholes as everybody else. Pandit could drive a modest family sedan whose purchase was made possible by a Citigroup loan. The AIG entourage could come in a bus that it insures, with some leftover space in the back for pile of credit-default swaps. Just so taxpayers can see what they actually look like, since we own a bunch of them now.