Closing Chrysler Dealers: Cui Bono?

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May 28 2009, 8:37 am by Megan McArdle

This certainly doesn't look good: "The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?"
My operating assumption is that this story is a red herring. Democratic and Republican dealers are unlikely to be found in the same place, and the rural counties that tend to be red are probably less profitable. I would be less surprised to find out that the administration rescued specific donors from the hit list than to find that they deliberately closed Republican dealerships.

Still the administration should answer this; it gives the appearance of Chicago-style corruption that is going to further taint a Chrysler takeover which has already left a number of people in the business and finance community wondering how firm the rule of business law is these days.

Update: Nate Silver points out that most auto dealers are Republicans. That doesn't quite explain why so far only one Obama donor has been closed down, but it makes it difficult to definitely conclude bad faith.

Comments (3)

Colonel Danite May 29, 2009 1:02 PM

So despite the facts or lack thereof, you are going to play along with a meme created by the Wacky Right? The "Chicago-style corruption" phrase is right out of RedState and Malkin for goodness sake.

I know you opposed the government bailout of the auto industry and the hard bargain forced on debt holders in particular. If, however, Chrysler had been liquidated to pay debt holders, there would be NO dealers remaining. Also tens of thousands of auto workers and probably hundreds of thousands of other who work for vendors and neighborhood businesses that support Chrysler would be out of work. The government getting involved in the auto industry like is a horrible thing but not as bad as the alternatives.

Jess May 29, 2009 5:00 PM

As will be the case for every "business" decision that comes down from on high during this administration, incompetence is a far better explanation than malice.

Mark Buehner May 29, 2009 5:20 PM

Even if this charge is true, people are looking at it backwards. I think its VERY unlikely that Rattner much less Obama is targeting Republican supporters. But I think it is entirely plausible that they could be shielding Democratic supporters. The result ends up the same, but the intent and the method is far different. It's a lot easier to believe that some well juiced Democratic auto dealers made some phone calls to the DNC (where Rattner's wife was formerly the Finance chair) begging for help, and that got winked and nudged into practice.

Ultimately this is a legitimate conflict of interest, if nothing else. The appearance of favoritism is going to haunt the government if it insists on playing in the markets like this. Worse, we're not getting anything like the transparency we were promised by this administration, which is bound to fuel the conspiracy fires.

Bottom line- returning favors is a much more plausible scenario for this issue, id indeed this numbers are as alarming as they seem.