Romney Bankruptcy Soundbyte Working against Him in Key Home-State Primary


Understanding the power of the soundbyte, whether spoken or in print form, apparently isn’t the forte of multi-time presidential hopeful and arguable frontrunner for the Republican nomination. The Obama Administration already appears to be licking its proverbial chops over the Romney recent quip “I don’t care about the very poor,” whether taken out of context or not. However, the incumbent team might not even get to pounce on it in a general election as recently surging Rick Santorum has taken the lead in polls predicting the outcome in Michigan where, despite his childhood roots, Romney has a considerable image problem largely based on the “Let Detroit Go Bankrupt” headline he penned as part of a now-infamous New York Times op-ed piece. And that could cost him dearly in the monumentally important Michigan primary taking place on Tuesday.
 
In the fall of 2008, Romney bashed President Barack Obama for the proposed bailouts of Chrysler and General Motors, and the headline that went along with the story has continued to follow Romney like a black cloud whenever he’s shown his face in Michigan or other auto-dependent states like Ohio. Granted, Romney’s point was about ways to better manage the bankruptcies to improve business prospects for the long-term health of the companies and never to suggest a liquidation that would have caused millions to lose their jobs. Still, Romney’s political opponents on both sides of the aisle have repeatedly pounced on “Let Detroit Go Bankrupt," and the person in the best position to reap the rewards is Santorum.

For his part, Romney has doubled-down on his bankruptcy theories and continues to rail against the Obama administration-engineered bailout of Chrysler and GM, lobbing allegations such as “crony capitalism” and that Washington sold out the taxpayers to strong unions when analyzing the administration’s role in the solution. The problem is, as most experts have acknowledged to varying extents often based on political affiliation, the government-assisted bankruptcy for two of Detroit’s “Big Three” was a success story. And many believe the restructuring efforts would not have been nearly as successful without some financial assistance from the federal government. It’s an assertion shared by Bruce Nathan, Esq. of Lowenstein Sandler PC, among others, during interviews in 2011.

How much the 2008 headline and Romney’s criticism of a successful strategy will hurt him have yet to be realized, but with Michiganders heading to the polls Tuesday, the answer seemingly isn’t far off.

Brian Shappell, NACM staff writer
 

2 comments:

  1. Was the NACM in favor of granting priority to the UAW, ahead of the general unsecured shareholders in the Chrysler and GM reorganizations?

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  2. Jacob Barron, CICPMarch 12, 2012 at 1:38 PM

    Frank,

    NACM took no official position on anything pertaining to the automakers' bankruptcies, but we do oppose anything that unfairly disenfranchises unsecured creditors on principle. I wrote an article in the July/August 2009 issue of Business Credit magazine that discussed the disturbing implications of the GM/Chrysler proceedings (email me if you'd like a copy), most notably how the absolute priority rule was essentially abandoned. It turned out okay for unsecureds in that instance, and turned out okay for the industry at large, but there are still several troublesome precedents set by those cases.

    Send me an email if you'd like to talk more about this. I'd be interested in hearing if there have been any resonant effects from GM/Chrysler in the three years since they were filed.

    Thanks for reading,
    Sincerely,
    ~Jake

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