To save or not to save?
Obama administration on Chrysler's fate: To save or not to save?
WASHINGTON — One of the great debates inside the Obama administration during the tumultuous 2009 auto rescue was whether the government should aid Chrysler.
The company was much weaker than General Motors, and many doubted it could survive.
“It was about whether we were trying to save something that was beyond saving — was Chrysler in such a weakened state, that even if we provided it with aid, we could be back in the soup anyway,” departing White House mnufacturing czar Ron Bloom said in an interview Friday.
Bloom, who was in the thick of the administration’s auto rescue in 2009, was one of the strongest advocates among President Barack Obama’s advisers for extending a lifeline to Chrysler.
Bloom said he wasn’t sure it would work.
“The first six months post-bankruptcy was a tough time,” Bloom said of Chrysler. “I don’t think anyone ever pushed the panic button. But let’s say people were very watchful.”
Chrysler’s strategy to cut back on incentives and invest in operations led to a hit in its market share. But the government was persuaded Chrysler’s new strategy was sound and just needed time.
“Starting in early 2010, we finally started to see steady tangible progress,” Bloom said. “Obviously you look at it now, and it’s pretty obvious we made the right choice. But you look at it at the time, it was a really close call. It was a calculated risk.”
Bloom said looking back, he feels no ambivalence over the auto rescue because he believes the only alternative was letting GM and Chrysler collapse and liquidate would have sent shock waves through the interconnected auto sector and taken down Ford, U.S. suppliers and thousands of auto dealers.
“Had we chosen to not intervene, there would have been a very significant series of job losses. Whether it would have cascaded into another Lehman Brothers-type event, we’ll never know. But if one million jobs had been lost, no one knows how bad it could have gotten,” Bloom said.
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