Barney Frank is not quite getting it - as he tries to explain his position on the auto bailout, he is actually undermining efforts to prevent the total eradication of the US run Domestic auto Industry.
Both sides are making legitimate points. It is also clear that Obama has sent out a clear message as what needs to be done in the short term. However opponents to a bail out make good points and Barner Frank's response is not satisfactory.
Mr Frank correctly points out that Wall Street has received all the benefits and mainstreet none. Clearly this lack of balance will be rectified - especially by the expected deficit spending package that Obama is undoubtedly working on.
But Mr Frank is being disengenuous by using AIG salaries as a benchmark. What salaries is he talking about. AIG is a holding Company. AIG's expense ratio was always the lowest in the Industry and AIG staff got paid less and were often motivated by AIG stock. AIG owns atleast 100 highly successful Insurance Companies who themselves must compete with thousands of other Insurance Companies. AIG employees are not unionised.
So every time Mr Franks goes down this road he simply confuses the real issues and his subsequent comments always fall way short. The issue is that the auto Companies who have been awful for decades,require massive restucturing. Most AIG Insurance Companies do not require restructuring - since they have always been profitable and remain so). This means auto labor costs brought in line with other US auto factories, massive white collar cost reductions and much of management fired. Like Dingle - every one involved in undermining gas efficiency standards must go.
Now this can not happen voluntarily. At the very least bankrupcy must be threatened and failing that, a quasi Government takeover that takes the sting out of bankrupcy.
It is great to hear Barney Frank say that he will not change the terms on the $25 billion linked to greener Cars - I agree. He can also say that it is time to help mainstreet -(this is going to happen regardless) but he must stop over reacting to any mistakes that may have been made (with TARP) and he must start demanding concessions from the unions, demanding real pain amongst the management, and demand a plan with some job losses (in factories that make stupid cars) offset by some job gains as they start building better Cars (Ford and perhaps GM have far better Cars in Europe - start building them here)
We all understand that to survive (and invetibly in a smaller form)the the US auto industry must reinvent itself. The longer it takes - the more money down the drain.
Barney Frank, by providing incorrect analogies undermines the more progressive solution and enhances the plausible and sincere comments made by Shelby and his backers. In debates between the two - this should be quite an easy argument to win (and as explained so succincly by Obama)- but Barney's confusion means that he is losing the argument.
On the other hand - perhaps it is a good thing that for the moment he is losing the argument - because his approach does not yet have sufficient merit.