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How Paul Ryan Solves Romney's Auto Bailout Problem

DETROIT ( TheStreet) -- Mitt Romney had a problem associated with opposing the auto industry bailout, which obviously succeeded. He may have solved it by selecting Paul Ryan as his vice presidential running mate.

Ryan, who comes from Janesville, Wis., a GM (GM - Get Report) town, backed the bailout. Specifically, he voted in December 2008, during the closing days of the Bush administration, to back a $14.5 billion loan to Chrysler and GM. The bill was opposed by most Republicans, including Romney, and died in the Senate, but Bush later authorized a $14 billion loan to the automakers from the Troubled Assets Relief Program.

"Romney had backed himself into a corner with uninformed statements about the auto bailout," said independent automotive analyst John Wolkonowicz. "So the choice of Ryan made lots of sense in that it diffuses the position Romney and the Republicans let their ideology back them into. I think (Ryan) is just what was needed to give Romney a fighting chance in the election."

Ryan "is a guy who understands the auto industry," said analyst Rebecca Lindland of IHS Automotive. "He lived in a town with a GM plant, and he would have grown up with the perspective that the auto industry is incredibly important to the fabric of the economy." This is how the auto industry sees itself, probably accurately.

Lindland noted that Ryan will likely appeal to auto workers, given his "combination of interests that Janesville people enjoy," including hunting and fishing as well as saving auto industry jobs.

The auto industry firmly believes, as Wolkonowicz said, that "the bailouts were essential to prevent a meltdown of the global auto industry and a consequent global depression.

"Had GM and Chrysler been allowed to go bankrupt, much of the global supplier community would have failed," he said. "This would have driven Ford (F - Get Report) into bankruptcy as well as other global auto companies."

The Janesville GM plant opened in 1919. Employment reached as high as 7,000 in 1970, but had fallen to 1,200 when the plant closed in December 2008. Ryan worked closely with state Sen. Tim Cullen, a Democrat who is also from Janesville, to convince GM not to close the plant, the Milwaukee Journal-Sentinel reported Saturday on its political blog. "Cullen said that Ryan was more focused on the ultimately failed goal to keep the plant alive than getting political credit," the newspaper said.
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