Feb 15 Mitt Romney says winning the
Republican primary in Michigan -- his boyhood home -- has become
"personal" for him.
But for Detroit executives, dealers and others who lived
through the industry's near-death experience and revival,
Romney's renewed criticism of the bailouts that saved General
Motors and Chrysler has also become personal -- and polarizing.
That includes a number of Republican "car guys" who say
Romney got it wrong on an issue close to home.
Bob Lutz, a former vice chairman at GM who remains an
adviser, said he was "infuriated" by Romney's charge this week
that the 2009 government-funded bankruptcies of GM and Chrysler
represented "crony capitalism on a grand scale."
"It's once again the fiction that 'Ah, we didn't need the
government and this could have been a privately run bankruptcy
with the normal Chapter 11,'" said Lutz, a Republican. "What
these people always deliberately forget is there was no money.
Nobody had any money."
In an opinion piece in the Detroit News published on
Tuesday, Romney said he supported a "managed bankruptcy" for
both GM and Chrysler.
But he said the Obama administration's funding of their
bankruptcies amounted to a "sweetheart deal disguised as a
rescue plan" since a healthcare trust run for union retirees was
given a major ownership stake in both.
"The president tells us that without his intervention things
in Detroit would be worse. I believe that without his
intervention things there would be better," Romney wrote.
The comments extended a position the former Massachusetts
governor first staked out in 2008 when he wrote a piece for the
New York Times titled "Let Detroit Go Bankrupt."
It was the second time this month that the auto bailout has
become a political flashpoint. Republicans, including strategist
Karl Rove, blasted a Chrysler ad that aired during the Super
Bowl as an endorsement of the Obama White House's auto bailout.
In an unusual editorial-page response to Romney, the Detroit
News said Romney was wrong to suggest there was a private-sector
alternative to the government-funded rescue that began with $17
billion in bridge loans extended by then-President George Bush.
Industry executives also challenged Romney's claim there was
a private alternative to government funding at the depth of the
"This is the lie that gets told again and again and again --
government intervention wasn't necessary, that this was creeping
socialism, that Obama wants to take over or give a sweetheart
deal to the unions," Lutz told Reuters.
Mike Jackson, chief executive of the auto dealership group
AutoNation, called Romney's opinion piece "reckless, detached
from reality and dishonest."
"It was Bush that stepped in with the bailout," said
Jackson, also a Republican, told Reuters. "Mitt's assertion that
private financing was available in fall of 2008 into 2009 is
The Center for Automotive Research, an Ann Arbor,
Michigan-based think-tank supported by the auto industry,
estimated more than 1 million jobs would have been lost if GM
and Chrysler had been allowed to fail.
David Cole, the now-retired head of the center, said he
believed then that the failure of government intervention would
have been catastrophic. "Had a company like GM shut down, it
would have shut the entire industry down," said Cole, who
describes himself as a conservative.
One Detroit-based auto industry adviser, who asked not to be
named, said he had been inclined to vote for Romney before the
most recent controversy. "But for me this just calls into
question his judgment," he said.
Steve Rattner, a Democrat and the former head of the Obama
administration's auto's task force, called the idea of a
privately funded restructuring of GM and Chrysler "utterly
"No one -- I repeat, no one -- had the slightest interest in
funding these companies on any terms," Rattner said in a blog.
But Rattner said Romney may have succeeded in winning over
hard-line conservatives with his opposition to a bailout, a more
important political goal than winning an argument over how
bankruptcy law was treated by the Obama administration.
"I think he was simply trying to pander to people who think
the government should stay out of this stuff and who think Obama
is in the pocket of unions and I'm in the pocket of Wall
Street," he said.
The U.S. government provided $85 billion in emergency loans
to prop up the auto industry.
As part of a restructuring of GM in bankruptcy, the Obama
administration took a nearly 61 percent stake in the automaker
in exchange for a $50 billion bailout. The Treasury also took a
small equity stake in Chrysler, which was put under the
management control of Italian automaker Fiat SpA.
The Treasury's stake in GM has been whittled down to nearly
one-third after a stock offering in November 2010 that sold the
automaker to investors on the view it had been remade by
slashing debt, closing plants and cutting jobs.
Last May, Chrysler repaid $5.9 billion in loans owed to the
U.S. Treasury as part of a refinancing, followed quickly by
Fiat's purchase of the U.S. Treasury's stake in Chrysler.
Romney won the 2008 Michigan Republican primary and grew up
outside Detroit as the son of an auto executive and former
Michigan governor. He began running ads in the state this week
ahead of the Feb. 28 primary where he faces a challenge from
conservative rival Rick Santorum.
Romney's first television commercial juxtaposes images of
him driving with shots of riverfront GM's headquarters and a
decaying house in Detroit.
"How did an industry and its leaders and its unions get in
such a fix that they lost jobs and they lost their future," he
asks in the ad. He adds, "Michigan has been my home and this is
A Romney campaign spokesman was not immediately available to
comment on the reaction to his comments on the bailout.