For months, I’ve been wondering why no one wants to challenge how the politicians spin it. During the Vice Presidential Debate, Biden said:
“Romney said, ‘No, let Detroit go bankrupt.’”
According to the Washington Post:
This statement is drawn from a headline — “Let Detroit Go Bankrupt” — on an opinion article written by Romney for The New York Times. But he did not say that in the article. (He repeated the line, however,on television.)
Although “bankrupt” often conjures up images of liquidation, Romney called for a “managed bankruptcy.” This is a process in which the company uses the bankruptcy code to discharge its debts, but emerges from the process a leaner, less leveraged company.
Ultimately, along with getting nearly $80 billion in loans and other assistance from the Bush and Obama administrations, GM and Chrysler did go through a managed bankruptcy. But many independent analysts have concluded that taking the approach recommended by Romney would not have worked in 2008, simply because the credit markets were so frozen that a bankruptcy was not a viable option at the time.
Biden also overstated the Obama administration’s role in saving the auto industry, glossing over the fact that the outgoing George W. Bush administration first bailed out General Motors and Chrysler.
There you have it. See Wikipedia for all the gory details.