The Congress voted quickly to provide a bail-out for Wall Street firms and has no real oversight of where/how the money is spent, but the same congress is extremely slow to provide money for auto manufacturers. I’m convinced this is due to a few reasons:
1. We and Congress understand the problems of the auto industry better than the financial crisis created by Wall Street and mortgage banks. We’ve seen just how negligent the Detroit executives have been in making a profit compared to their competition (Toyota and Honda).
2. The financial bail-out was sold as something that was not only good for “Wall Street”, but necessary for “Main Street”. In addition, we were made to feel that we actually had a part in causing the financial crisis by buying homes we couldn’t afford – even though the problem was mostly caused by lack of regulation of the financial industry. However, with the failing auto industry, we and congress act as if it’s not a “crisis”.
Sure, there are more reasons for why the auto bail-out feels different than the financial bail-out, but I think the biggest reason is that no one (even now) really has a grasp of how expansive the mortgage/financial crisis actually is (or will be). Therefore, we are willing to give Henry Paulson and Wall Street’s whatever they ask for to “solve” the crisis for us – even though this is the same group that got us in this mess.
Sorry, Detroit. It seems like congress and most of the public are just tired of hearing about problems in your industry and we’ve had all the “crisis” we can stand.
Wall Street vs Detroit Bail-Out: [Video]
Auto Executives Request Bail-Out Again: [Video]
GM CFO Against Bankruptcy: [Video]
Tags: auto industry, congress, economics, wall street