Thomas A. Murphy Quotes

He had already decided to save General Motors which was much larger and more critical to the national economy. The normal capitalistic broken down and there were no private firms that were willing to invest, control and continue the companies at any price. There were 1 million immediate jobs at stake with GM plus the collapse of the American Auto Industry including dealers and suppliers. With Chrysler, there were only 300,000 immediate jobs at stake. Ironically, one of the major reasons for trying to save both companies was the fact that Summers team had discovered that the companies were very badly managed. If the bailout could be leveraged to force radical management change and reform, the chances of success would have been much greater than if the companies had been well managed but were still losing money rapidly. The policy decision was brilliantly successful. The reformed auto companies quickly became profitable, and the taxpayer loans were paid back early with interest to and profits to the taxpayers. All those jobs and an iconic American industry not only were preserved but became very profitable and strong and in the final analysis, it did not cost the taxpayers even one dollar. Ford was in less trouble, but if the other two companies failed, the Ford suppliers would mostly fail, and Ford also would have gone down.

The first part of this quotation has defined the attitude of most Americans towards private enterprise and government since then. The second part of the quotation—the undesirability of public ownership of railroads has given way to the modern problem that no passenger railroad can be operated profitably by anyone—private or public. So Roosevelt’s “far-reaching disaster” was finally complete with the Federal Government taking over responsibility for Amtrack.

There was a financial crisis in the country and the world when highly risky home mortgage loans defaulted leaving investors and speculators in mortgage-backed securities in a poor position. The investors had been reaping very high interest rates for their risky investments, but this was the first time that this form of risky investment had failed. The investors, of course were looking for a bailout from government. When the Bush administration failed to bail out investment bank, Lehman, there was a panic and the banking system of the country and much of the world froze up. Bush and his Secretary reversed their bailout of speculators policy and provided various assistants and bailouts to the very bankers and other investors who had caused the economic meltdown. The policy was continued by the Obama administration although the bailouts were just as distasteful to Obama as they were to Bush, but most economists agree that the two presidents very distasteful and unpopular bailout actions probably saved the nation from a massive depression. After being bailed out by the taxpayers, the Bankers then paid themselves exorbitant bonuses while the results of their management put 10 percent of the country out of work.

This quotation illustrates the early Ronald Reagan administration who were very ideological—so much they would not even recognize the Chrysler bailout policy results as a success and take some of the credit for saving a major American corporation. (Even though most economists and political pundits gave them credit for a large success.) As the pressures of the national and world problems pressed on them, the President became much more pragmatic although some of his team were still zealous ideologues.

Geithner, the Treasury Secretary immediately after the Meltdown of 2008, facing complete collapse of our financial system, among other ameliorations, advocated and implemented many subsidies to bail out the banks most of whom had been greedy, foolish and often dishonest. He even allowed banks to use taxpayer money to pay bonuses to Bank executives who had brought the bank to ruin being a cause of the crisis. However, the banks not only survived but recovered and made huge profits while many of the taxpayers whose funds were used to help the banks were still struggling to make ends meet and it was they who received little, if any, government assistant.