More Welfare For Really Rich Guys
Just in case anybody’s keeping track, the government has now appropriated $9 billion in bailout funds to some of the richest folks in America. This would be Cerberus Capital Management, the private equity fund that owns majority stakes in GMAC and Chrysler and whose chairman is John Snow - the last Treasury Secretary before the current one, Henry Paulson.
Cerberus is a worthy supplicant because it’s flat out of money - hahaha, just kidding! Cerberus actually has plenty of money, courtesy of a secret list of well-heeled investors. And that’s not even counting the personal stash of billionaire Stephen Feinberg, the company’s founder and CEO. No, Cerberus is a worthy supplicant because of the 35 or so companies that it owns, its two auto-related properties are really hurting.
Now in a normal capitalist society, Cerberus’s losses on two troubled companies would merely be the cost of doing business, and odds are high that its gains on other investments would offset those losses. Or else Cerberus would go out of business, and be replaced by a more competent group. But here in Bailout Nation, Cerberus gets special treatment.
Chrysler, with one of the weakest product lineups in the industry, qualifies for $4 billion in bailout money because it employs 55,000 workers and it would be an inconvenient time for an industrial firm centered in the most depressed part of America to go bankrupt. GMAC gets $5 billion because it’s losing billions on foolish mortgage-related investments that are going bust, and because General Motors, which owns 49 percent of the lender, can’t sell cars if GMAC isn’t there to make loans.
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