The U.S. government should provide funding to struggling Detroit automaker General Motors , Wilbur Ross, chairman & CEO of WL Ross & Co., told CNBC on Friday.
“This notion that letting GM go bankrupt as an alternative to government financing is wrong,” he said.
Most of the people employed by the automotive sector don't work for the big car companies, but for their suppliers, Ross said. If any of the Big Three automakers were to go bankrupt, he said, the suppliers would ultimately end up in bankruptcy too.
The government also underestimated the severity of the financial crisis, he added, and as a result, it worsened. “They’re now into playing catch up ball." (See the entire interview in the accompanying video.)
“The government is partly to blame, because just as we don’t have a coherent energy policy, we don’t have a coherent economic development policy,” the billionaire investor said.
Likewise, the government’s alterations to its rescue plan, announced this week, create confusion in the markets, he said.
“Investors can live with good news or bad news, but uncertainty is very hard to live with,” he said. “When investors see the government changing its mind, they have great concern that maybe they’ve got it wrong.”
More From CNBC.com
- Click Here for After-Hours Quotes on GM Stock
- White House: Democrats Headed to 'Gridlock' on Autos