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What If Romney Had Backed Auto Bailouts?

Stocks in this article: F GM

To look back at Romney's New York Times November op-ed piece famously headlined, "Let Detroit Go Bankrupt," is to make Romney-backers wonder what might have been.

Based on the headline, Romney was prescient. When he wrote his piece, many in the auto industry believed bankruptcy would scare off so many buyers that any automaker that filed would destroy itself. Yet within five months after Romney's column appeared, Chrysler filed for bankruptcy, and within seven months, GM filed. These bankruptcies saved both companies,

Not only did Romney correctly advocate for auto industry bankruptcies, but also he expertly summarized the Detroit Three's problems, including: "The suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses." His prescription: "their huge cost disadvantage in costs relative to foreign brands must be eliminated;" "management must go;" "new management must work with labor leaders to see that the enmity between labor and management comes to an end;" and "investments must be made for the future."

All four of these things have, in fact, occurred. At Ford (F) , the process began when Alan Mulally arrived as CEO in 2006. At GM and Chrysler, the work also began before the 2009 bankruptcies, which sped things up.

In fact, it seems that the main thing separating Romney from Obama on the bailout is that Obama gave automakers debtor-inpossession financing while they were still in bankruptcy, while Romney said he would have given them the money when they came out of bankruptcy. His concept, he said, was that "the federal government should provide guarantees for post-bankruptcy financing."

Somewhere in the Romney campaign is a person who decided to take this Detroit guy and turn him into an anti-Detroit guy. Too bad they didn't look at the electoral map first.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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