Crony capitalism.

Position:FINALWORD - General Motors Corp. - United Automobile Workers - Troubled Asset Relief Program (US Treasury

IN ANNOUNCING THE GOVERNMENT'S PLAN TO RESTRUCTURE GM, President Obama repeated his intention to keep the government's hands off the steering wheel. "I have no interest in running GM, "he said. "They [management], not the government, will call the shots." But the very route taken to save the company suggests that this is highly unlikely. The Obama deal gives bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts. This is a transfer of property of one group of people to another group that is politically favored, and is not something a bankruptcy judge would normally allow. In the process, it has set aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party. It's a remarkable act for a president, who has run only a Senate office and a presidential campaign, to think that he can run a major industrial company.

Does anyone imagine that the government, now that it is a 60 percent owner, would not intervene? The president's deal was barely on the table before Michigan's Democratic representative John Dingell was hammering Fritz Henderson, GM's hapless boss, to stop a planned closure of a transmission plant in his home state. When GM cited 2,000 dealerships that would have to be eliminated, John Rockefeller, the Democratic chairman of the commerce committee, expressed "concern." Sen. Mark Warner (D-Va.) recently told the media that "Congress had a right and responsibility to ask questions."

Last November, when President Bush bypassed Congress by diverting $15.4 billion from the Troubled Asset Relief Program (TARP) to the company William C. Durant had built, he initiated a fateful series of events that will plague American capitalism for generations. To date...

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