Why Are Banks So Different From Autos?

This is such an . . . odd quote .. about the auto bailout in the NYT:

“Not since Harry Truman seized America’s steel mills in 1952 rather than allow a strike to imperil the conduct of the Korean War has Washington toyed with nationalization, or its functional equivalent, on this kind of scale. Mr. Obama may be thinking what Mr. Truman told his staff: “The president has the power to keep the country from going to hell.” (The Supreme Court thought differently and forced Mr. Truman to relinquish control.)”


You mean the biggest insurance company in the world (AIG) wasn’t just nationalized in September?

Or the largest holders of US mortgages — Fannie Mae and Freddie Mac, with $5.5 trillion in mortgage assets — weren’t just put into Conservatorship earlier the same month?

And I guess a $300 billion dollar commitment into Citibank, which is worth one tenth of that amount– that’s a major foray into the world of nationalization? Wasn’t the Fed $29B finance JPM’s buy of Bear Stearns a similar venture?

Here is the question I cannot figure out: Why are the automakers treated so differently than the banks? Why must they cancel their dividends, but not the banks? Shouldn’t they ALL have to change their bonus and exec comp structure, kill the divvies, and start behaving like responsible bailout recipients?


Washington Takes Risks With Its Auto Bailout Plans
NYT, December 8, 2008

U.S. seizes Fannie and Freddie
David Ellis
CNNMoney.com September 7, 2008: 8:28 PM EDT

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