“This is a major power grab by the White House on the heels of another power grab from Secretary Geithner who asked last week for the freedom to decide on his own which companies are ‘systemically’ important to the country and which are not.” And then you say, “this is truly a breathtaking departure” referring back I guess to both GM and Geithner.
Tell me what you’re thinking here. Why is this a breathtaking departure?
SENATOR CORKER: Well Larry, today a bright line was crossed. First of all, the administration has been slow on the uptake as far as dealing with these companies. They’ve basically just let it go. They realized they were going to have a nothing burger kind of press conference today, and so they had to look like they were doing something. [And so] they fired [GM CEO] Rick Wagoner. And then now, in essence, they have taken over these companies.
I think the thing that probably got my attention more than anything else was last night on the conference call them explaining that in the Fiat/Chrysler merger, they are forcing Fiat to build energy efficient cars in this country as part of the deal. And so they are going to be deciding, obviously, which plants in this country stay alive, which plants are closed. They are going to be very involved in what I consider to be industrial policy, which is a very bright line that this country has not passed in the past. And we did it today. And I think it’s something that all of us need to stop. This is numbing what is happening to us. It’s like bowling an egg, it’s just kind of gradually happening. But today I think was a very bright line that all of us need to be aware of.
KUDLOW: Senator Corker, here’s a question. What gives the government—I’m going to ask you a legal or constitutional question, much less a policy question—what gives the United States government the right to tell manufacturers what plants to keep open, what plants to shut? But maybe even more, what products to make? Because your point about Fiat making green cars, if you read the Treasury term sheet on the Wagoner dismissal, and the GM failure to come up with a good plan by the deadline which is tomorrow, you know they mention green clean cars, they mention the failure of the Volt. Since when does government dictate the product line of an American company?
CORKER: That’s the point.
KUDLOW: So that’s the line. We’ve crossed the Rubicon here. I may as well use a Roman metaphor since we’re talking Fiat.
CORKER: That’s exactly right. And on the conference call last night, it was very evident to me that those comments were being said to pacify people on the left that were part of the call last night. So to me, again, this on the heels of Treasury Secretary Geithner’s announcement Thursday that he’s seeking, on a permanent basis, TARP-like ability—he wants to codify his ability to do the things that he’s been doing on into the future, and let him decide which companies pose systemic risk, I think that we all need to stop. We need to everything we can to reverse ourselves out of where we are. And I have great concern that that’s not where we’re going as we look at the many other policies that are buried in this budget that the administration has put forth.
KUDLOW: In our capitalist system, wouldn’t this better be the duty, the domain, of bankruptcy judges, bankruptcy court judges…
KUDLOW: ...Which have always been the principal restructurers? If we’re going to violate contracts we leave it up to the judges to do so and then work out. In other words, is that what’s missing? You were for a pre-planned bankruptcy, I happen to agree with you sir. But isn’t this the role of bankruptcy court?
CORKER: It is. And I think on February 17th, when these plans were submitted, everybody knew that they were not good enough. The board could have been working towards a pre-arranged bankruptcy today. That’s what the terms of the agreement were. But instead, nothing happened. I met with the task force last week, which I appreciate, I could tell there were really no tangible conversations taking place. Then all of a sudden, in essence, a company is taken over. So working towards an orderly pre-arranged bankruptcy could have been done by this board. Instead, this administration has taken over the company. They are directing the company. They’re deciding who is going to be on the board of this company. And furthermore, they are going to be deciding the products and the plants that this company will make into the future. And again, it was a very bright line that we passed today.
KUDLOW: I’ve got two quick additional questions if I may, sir. Did President Obama’s actions today, the actions of the auto task force, did they forget to include Mr. Gettelfinger, [president] of the UAW?
CORKER: You know I’m not—look, there’s a lot of people certainly to blame for where this company is today. And I don’t know what their conversations have been. I know one of your earlier guests, as I was listening, was talking about the fact that they will be a focus very, very soon. So I think I’ll leave that to the administration. I do hope, I know there’s been a lot of prognostication about what’s going to happen. I hope for the sake of all those folks who depend upon these companies, that this administration gets it right. But they’re doing it in the wrong way. And I think that’s the thing that to me, again, is scary. And I think the American people, Larry, all of us, are becoming numb to this everyday erosion of what has made this country great.
KUDLOW: Well I think there’s a very strong populist revolt—by the way, populism from the left and populism from the right—against bailout nation. And that’s my last question to you sir. What happens next in terms of taxpayers? Taxpayers are going to pony up, what, 60 more days? I don’t know why. We’re going into bankruptcy. The president’s people admitted as much in a late afternoon breaking Wall Street Journal story. Why are taxpayers having to do this another time? And what do you reckon, how much is this going to be, this next tranche?
CORKER: Well I don’t know. If you remember, Mark Zandi, in our second hearing, which is why I got as involved as I did in this to try to solve it in a different way, he said if one dollar went into these companies, we’d ultimately spend between $75 and $125 billion dollars. And it looks very much to me like that’s the direction we’re heading.
KUDLOW: We’re on track. I am sorry to hear that. But I have no doubt that you’re right. I have no doubt my friend Mark Zandi is right. Sen. Corker as always sir, we thank you ever so much for coming back on our program.
CORKER: Thank you. Thank you Larry.
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