Ever since Obama canned Rick Wagoner the other day (actually even before), a lot of people have wondered why the administration hasn't been nearly as tough on bank management as it's been on auto industry management. I don't think the situation is quite so neat--the banks have certainly taken a few lumps--but the question is fair enough. It does seem like the administration has less patience for the car-makers.
In response to which a reader of Josh Marshall's makes a very good point:
As a 30+ year veteran of the auto industry let me make the difference very clear; the banks can exist without the auto industry. The same cannot be said for the reverse. The automobile business from the manufacturers down to the consumers rely on banks for one reason or another.
Tough to argue with that.
Update: Jim Surowiecki has another explanation (not mutually exclusive):
[T]o the extent that there does seem to be a difference between the Administration’s strategy for dealing with the two industries, there is an obvious explanation: it’s relatively easy to see how the banks can return to profitability, while it’s much harder to see how the automakers can become profitable again, at least in the absence of the kind of radical restructuring you’d get through bankruptcy or some kind of deal with the bondholders.
The money the government has been giving the automakers has been going not to shore up their capital base, but literally to pay their bills. In the absence of government aid, the automakers would have had to shut down their factories because of their inability to pay suppliers and workers. That’s not true of even the most troubled big banks, which are having no problem meeting their debt payments or paying their bills: the government’s aid has gone instead to replenish their capital and allow them to stay in regulatory compliance. That doesn’t mean the government’s aid was not essential, but it was different: the money the government gave G.M. has already gone out the door, while in the case of the banks it’s still, for the most part, sitting on their balance sheets (which is where it’s supposed to be).