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Obama's Voice of Reason Puts Automakers on the Road to Rescue

And to restore the flow of liquidity to the auto finance market, the Treasury could be ordered to use some of the next tranche of money under the $700 billion bailout program to buy packages of auto loans, with an emphasis on loans made after Dec. 1, 2008.

Such a multipronged rescue might require the outlay of a bit more than $25 billion, but it would significantly increase the likelihood that taxpayer money would be repaid. The government could get a nice discount on a new fleet of fuel-efficient cars and trucks. Most importantly, a vital industry would be required to complete a restructuring that was too long delayed.

Let's be clear: While recent improvements have been made, these companies had been badly managed for decades. If they hadn't taken so long to respond to the challenge from imports, if they hadn't thrown away billions on ill-advised acquisitions, if they hadn't agreed to pay wage and benefits well above market rates and make ridiculous promises about job security, if they hadn't so stubbornly ignored fuel efficiency, they would not be in this pickle. Going into this economic crisis, they would have more market share, fewer legacy costs and a whole lot more cash in the bank.

That said, the rationale for rescuing auto companies is the same as it was for rescuing Wall Street banks -- they're too big and too interconnected to the rest of the economy to be allowed to fail. No, it's not fair and, yes, it sets a lousy precedent. The only reason for doing it is that the rest of us will wind up better off than if we did nothing.

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If you know of examples of companies that have made extraordinary efforts this year in support of a charity or nonprofit organization, I'd like to know about it for my annual holiday column. Just send an e-mail with details of what was done, by who, for whom, to Include the name and phone number of somebody to contact for more information. And be sure to put the words "Holiday Column" in the subject line, or it is apt to be inadvertently misplaced. Deadline is Dec. 12. Thanks.

Steven Pearlstein will host a Web discussion today at 11 a.m. at

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