I usually try not to write on the weekends, but when I was walking down the streets of Chicago last night when it was 15 degrees -- so much for global warming, at least here -- a modest automotive bailout proposal dawned on me. And it's simple -- something that could easily be worked into a bailout bill, the latest of which is a proposed $15 billion in funding to prop up the automotive industry through March of 2009. This latest proposal has both Whitehouse and Democratic support, so it looks like it will go through, helping keep two highly uncompetitive companies that deserve to go bankrupt treading water at taxpayer expense for yet another few months.
All is not lost, at least not yet, though. Why not add a simple clause to the bailout package that would force the management teams and UAW leadership to personally guarantee some percentage of the loans? You're probably thinking: "this guy is nuts". But when a small technology / social media entrepreneur like myself attempts to get a loan, you can bet in this environment that a bank would ask for a personal guarantee. And since the banks won't even loan to the automotive OEMs because they're a bad investment, why shouldn't the government ask for one as the lender of last resort? With the UAW's pension fund and the savings and retirement accounts of the management team of each organization and the union, I'm sure that we could all come up with a number that is reasonable.
It does not have to be all of the amount. But if it was a material percentage for all the parties involved, everyone would have skin in the game. In the case of the UAW head Ron Gettelfinger, who earned a total compensation of $158,530 in 2006, why not put him on the hook for 50% of his annual salary and 25% of his savings? That's better terms that I would ever get for running a profitable business in this environment. And without GM, Chrysler and Ford, Ron is not making anything. After all, it all comes down to aligning incentives and if he and the management teams don't want to pony up, neither should Washington.
- Jason Busch