There they go again. Middle aged men with long faces sitting at a table with microphones before them and cameras whirring on all sides. This time it’s the former heads of Fannie Mae and Freddie Mac, Richard Syron, Daniel Mudd, Leland Brendsel and Franklin Raines testifying before the House committee. The subject is the “orgy of junk mortgage development” as one contrite executive put it.
We’ve seen this movie before. Just the other day it was the three auto amigos: GM’s Rick Wagoner, Ford’s Alan Mulally and Chrysler’s Bob Nardelli. The wire service photo of an exhausted Wagoner wiping his brow with his hand said it all. Submitting to Congressional testimony is right up there with the annual shareholder’s meeting or holding a press conference with hostile reporters as one of a CEO’s least favorite things to do.
These events are one part
It’s hard to have sympathy for an industry whose management has not only shot itself in both feet but has reloaded and discharged rounds at remaining limbs. Yet many of these wounds are not self-inflicted. Just once I was hoping that one of the auto amigos would push back telling the committee that the federal government’s CAFÃ‰ fleet rule, to name but one example of federal intrusion, has basically made it impossible for the auto firms to produce the small cars it needs to offer under the regulation abroad at rates where the companies can make a profit.
One does not need to be an apologist for big auto to find the baying for Wagoner’s head unedifying. Sure GM leadership made its share of boneheaded moves. But who among the committee owned up to the federal government’s complicity in saddling the industry with requirements that basically pit the auto companies against their customers? GM vice chairman Bob Lutz had it right when he let it slip that what Congress really wants is for Detroit to produce small cars that are environmentally correct but which Americans do not want to buy. Europeans buy them because gas is $9 a gallon. But Americans are not Europeans. They like driving Suburbans, Explorers and Jeep Grand Cherokees as long as gas is under $4 a gallon. It would be more transparent of Congress to mandate a gas tax to bring fuel up to those price levels if they really want to change consumer buying behavior.
Forget having an auto czar. It would be refreshing to have just one honest congressperson admit that what Congress really wants is to replace
If only one of the auto chiefs stood up to the committee saying that management will admit to its mistakes if various Congressmen admit to theirs. And together they would forge a realistic industry work out with nothing left off the table. Now that would have been a Frank Capra moment.