Fact Check: Biden on letting Detroit go bankrupt

Biden claimed that Romney wanted the auto industry to go bankrupt.

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.

Glenn Kessler has reported on domestic and foreign policy for more than three decades. He would like your help in keeping an eye on public figures. Send him statements to fact check by emailing him, tweeting at him, or sending him a message on Facebook.

politics

post-politics

Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Comments
Show Comments
Most Read Politics

politics

post-politics

Success! Check your inbox for details.

See all newsletters

Next Story
Glenn Kessler · October 11, 2012

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.