A Chevrolet Volt on a GM assembly line in Detroit
NEW YORK (CNNMoney) — Would the U.S. auto industry be doing as well as it is today if it was Mitt Romney completing his first term as president?
Romney argues that his plan for the industry in his now-famous November 2008 New York Times op-ed piece, “Let Detroit go bankrupt,” was what the Obama administration eventually did: a managed bankruptcy at both companies. He insists that he was not in favor of the companies going out of business.
But in the 2008 piece, Romney said the money needed to keep General Motors (GM, Fortune 500) and Chrysler Group alive during bankruptcy should have come from the private sector, with the government providing only “guarantees for post-bankruptcy financing.” Those guarantees would have made lenders whole if the automakers subsequently defaulted.
The problem was that there was no one available to write checks for the automakers other than the government in late 2008 and early 2009.
The financial markets had melted down in the wake of the Lehman Brothers bankruptcy. Treasury was pumping billions into the nation’s banks, who were not willing to then lend money to a struggling auto industry — or anyone else.