One of the hallmarks of our "free enterprise" capitalist system is that for every winner, there are one or more losers. More often than not -- and the pace is accelerating -- the winners these days are corporations and the losers are large swaths of the American public.
Remember how we bailed out the too-big-to-fail banks? One of the trade offs was supposed to be that the banks would turn around to start lending to homeowners and Main Street again.
How has that worked out?
Not well at all! This hope was not made into a mandatory condition of receiving that public money and so the banks have kept almost all of the moolah for themselves. They came out as big winners and the rest of us came out as big losers.
We have now learned, thanks to an investigation by the Wall Street Journal, that the bailout of American automakers created even more losers than we originally knew.
All this sorry case points to is yet another example of how our system always seems to have the backs of our corporate overlords, but somehow fails to protect the American consumer. GM and Chrysler got their money at the expense of the Denton families of this world.
It's downright shameful!
Remember how we bailed out the too-big-to-fail banks? One of the trade offs was supposed to be that the banks would turn around to start lending to homeowners and Main Street again.
How has that worked out?
Not well at all! This hope was not made into a mandatory condition of receiving that public money and so the banks have kept almost all of the moolah for themselves. They came out as big winners and the rest of us came out as big losers.
We have now learned, thanks to an investigation by the Wall Street Journal, that the bailout of American automakers created even more losers than we originally knew.
Vicki Denton died several years ago after the airbag in her 1998 Dodge Caravan minivan failed to deploy during a head-on collision in the Georgia mountains. In 2009, a jury found Chrysler responsible for her death because of a manufacturing defect, awarding her surviving son and other relatives $2.2 million.For me, the interesting part of this arrangement is that the automakers weren't in a position to demand anything from the federal government. The Obama administration could dictate any terms they wished and they came up with this?
The family was near collecting those damages on the eve of Chrysler's government-brokered bankruptcy. Now, two years removed from a $12.5 billion bailout, Chrysler Group LLC still hasn't paid the damages, and doesn't have to.
The reason: The company's restructuring allowed it to wash away legal responsibility for car-accident victims who had won damages or had pending lawsuits before its bankruptcy filing. The same holds true for General Motors Co., which discarded the liabilities as part of its own $50 billion bailout and restructuring.
In rescuing the car makers, the U.S. government prevented a potential meltdown of the auto industry and further shocks to the economy. But in the process, it created a wide universe of relative winners and losers. The U.S. Treasury received large ownerships stakes in the restructured auto makers, as did union retiree trusts. Chrysler's banks got some, not all, of their loans repaid in cash, and GM's lenders were fully repaid. On the other side, thousands of dealers, asbestos victims and other creditors received little to no recompense.
Among the creditors who suffered most, car-accident victims represent a distinct mold. Unlike banks and bondholders, this group didn't choose to extend credit to the auto makers. As consumers, they became creditors only after suffering injuries in vehicles they purchased...
All this sorry case points to is yet another example of how our system always seems to have the backs of our corporate overlords, but somehow fails to protect the American consumer. GM and Chrysler got their money at the expense of the Denton families of this world.
It's downright shameful!
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