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House Democrat praises auto bailout

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House Democrat praises auto bailout

David Shepardson / Detroit News Washington Bureau

Washington -- The chairman of the House Financial Services Committee said the $85 billion auto industry bailout was "the single most effective thing" the U.S. government has done to preserve manufacturing.

In a breakfast with reporters today, Rep. Barney Frank, D-Mass., also said that the government's bailout of General Motors Co. and Chrysler Group LLC could still be considered a success -- even if taxpayers lose billions of dollars.

"There's just no question: the single most effective thing that the federal government has done to preserve and set the basis for manufacturing in America was to intervene with General Motors and Chrysler," Frank said at the forum sponsored by the Christian Science Monitor. "It is striking that it is still considered unpopular -- that's a very successful intervention."

The Obama administration has said more than 1 million jobs were saved as a result of the auto bailout. Despite the loss of 2 million manufacturing jobs since 2007, Frank said far more manufacturing sector jobs would have been lost without rescuing GM and Chrysler.

Frank said that Ford Motor Co. "strongly argued" for the rescue of GM and Chrysler because it could have led to a substantial reduction of the supply chain.

"We are better off as a country economically for having (bailed out GM and Chrysler)," Frank said.

Frank said the bailout could be called a success even with "some loss -- given that the alternative would have been either no General Motors or a substantially diminished General Motors, no Chrysler and a problem for Ford and a drop in the auto suppliers."

He praised the progress of GM and Ford -- but was more cautious about Chrysler.

"General Motors is doing very well -- Chrysler not quite as much," Frank said.

He noted that despite the "anti-bailout fervor of Republicans" that "every single activity of the federal government that has been called a bailout was initiated by George W. Bush."

In December 2008, Bush agreed to bailout the auto industry with nearly $25 billion. After taking office, President Obama added about $60 billion -- largely to put GM and Chrysler through a bankruptcy reorganization.

The government also acquired a majority stake in Ally Financial Inc. as part of a $17.2 billion bailout delivered under both administrations.

Earlier this month, President Obama said the rescue of banks and automakers "fed the perception that Washington is still ignoring the middle class in favor of special interests."

On Monday, Obama acknowledged the deep unpopularity of the auto rescue, saying "the last thing folks wanted to see was us helping the auto industry."

Frank said government needs to do more on trade policy to boost manufacturing

He also argued that the "effective gutting of unions in the private sector" is a "significant factor" in the widening income inequality in the United States.

He said the government can boost funding community colleges to help sectors of the economy that can't be outsourced.

From The Detroit News: http://detnews.com/article/20100924/AUTO01/9240428/1148/auto01/House-Democrat-praises-auto-bailout#ixzz10UURs1Wg

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