Explaining Hillary Clinton’s, Bernie Sanders’ votes on the auto bailout – Detroit Free Press
Hillary Clinton and Bernie Sanders discussed their stances on the auto industry bailout during Flint’s Democratic presidential debate. Here’s the nub of the fight over Clinton’s support and Sanders’ opposition to the auto bailout.
The $82 billion that helped finance the bankruptcy of General Motors, Chrysler, their finance subsidiaries — GMAC and Chrysler Financial — and a handful of large suppliers were part of a much larger Troubled Asset Relief Program (TARP) that covered more than $700 billion that went to bailout the largest banks, and AIG, the insurance giant that has issued credit default swaps that came due when the banks could not cover their losses on mortgage-backed securities.
In short, a Senator or congressman could not vote to rescue GM and Chrysler without voting to provide the money to keep the nation’s largest investment banks from failing.
Sen. Clinton voted yes. Sen. Sanders voted no.
It’s worth remembering that until the TARP funds were released, banks, as well as other lenders, had stopped financing loans and leases for new cars and trucks. As distasteful as it was to help global banks that made disastrously worthless mortgage loans, without the restoration of credit it’s likely that no effort to ignite an economic recovery would have gained traction.
Earlier, Secretary Clinton talked about Johnson Controls, a Milwaukee-based company that benefited from the $82 billion auto bailout because in 2009 it was one of the large auto suppliers that received some of that emergency funding.
More recently, Johnson Controls, which had a large presence in Plymouth and near Grand Rapids, has sold most of its automotive operations. In January it announced plans to acquire Tyco International, a company that had transformed itself from a diversified holding company into one focused on fire and security products.
In that process Tyco established a headquarters in Bermuda where it pays a much lower tax rate than in the U.S.
So if Johnson Controls completes the acquisition of Tyco, the combined company would be based in Ireland, which has a corporate tax rate of 12.5%, among the world’s lowest. The companies project they will save $150 million each year in lower taxes.
The practice, called a tax inversion, has motivated a number of recent acquisition.
Contact Greg Gardner: 313-222-8762 or email@example.com. Follow him on Twitter @GregGardner12
Flint presidential Democratic debate coverage roundup: