Yesterday, we told you that Michigan’s native son, Mitt Romney, has fallen behind former Pennsylvania Sen. Rick Santorum in two pre-primary polls. Now, Romney is firing back in the Detroit News. not at his rival, but at union leaders and Obama administration officials.
Romney touches on many themes about the 2009 auto industry bailout. You can read the entire op-ed here. We picked out three things and provide some context.
1) The UAW. Instead of standing up to union officials, Romney says President Obama “rewarded them” with stakes in General Motors and Chrysler.
The stakes he refers to are held by the health care trust fund that administers benefits for UAW members. But the UAW did not get the terms it wanted. The union originally sought a greater share of GM, only to accept a counter offer from the Treasury Department.
Meanwhile, the Treasury also owns about 33 percent of GM, out of an original 61 percent stake.
2) Sell GM shares. Romney calls on the government to divest itself of its ownership position in GM. “The shares need to be sold in a responsible fashion and the proceeds turned over to the nation’s taxpayers,” Romney says.
Treasury officials say they are acting responsibly. The department holds roughly 500 million GM shares. It made its initial sale when GM went public in 2010, but has waited to sell the rest, presumably expecting the share price to rise.
At the time, GM shares traded at $33. On Monday, they closed at $25.34.
That means the Treasury would get even less for GM shares than it did in 2010 if it sold them now. There would be no profit for American taxpayers, since the stock needs to sell around $50 a share for Treasury to break even on what GM received in bailout money.
3) Car company founders. Romney, writing about auto pioneers like William C. Durant, Henry Ford, and Walter Chrysler, says, “These giants never envisioned a role for government in their business, but relied on the hard work and commitment of private individuals.”
That didn’t work out so well for Durant. He went to East Coast bankers for help shortly after he founded GM in 1908. They agreed to provide financing, on the condition that he resign. Although Durant later regained control of GM, he was kicked out yet again by investors in 1920.