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CNBC's Burnett Downplays Senator's Opposition to Auto Bailout

     Representing your constituents’ interest is simply code for taking an ideological position, according to CNBC “Street Signs” host Erin Burnett.

 

     Burnett appeared on MSNBC’s “1600 Pennsylvania Avenue,” hosted by David Gregory, to analyze testimony delivered to Congress Dec. 4 by the executives of the big three automakers – Ford (NYSE:F), General Motors (NYSE:GM) and Chrysler (NYSE:DAI).

 

     There had been opposition during the hearing, most notably from Senate Banking Committee ranking Republican Sen. Richard Shelby of Alabama. To Burnett, his opposition was futile and motivated by ideology – even though a poll shows residents of his state opposed the previous $700 billion Wall Street bailout.

 

     “People like Richard Shelby from Alabama are always going to go against this,” Burnett said. “But, he knows that this will probably happen so he has the advantage of taking the ideological position without having to go through with it all the way.”

 

     But Burnett’s view that Shelby’s opposition is no more than ideological grandstanding for a lost cause isn’t quite the case. While a lot of experts think a bailout is likely to happen, Shelby’s said in his remarks at the hearing that his goal is to prevent taxpayer-funded bailouts from getting too out of control.

 

     “A lot of people believe sincerely that the restructuring plans each of your companies have provided to us are not a serious set of plans, that they contain little detail,” Shelby said to the auto executives. “I suspect any responsible bank would summarily dismiss your request.”

 

     And Shelby’s opposition has yielded some results. He is a proponent of allowing the automakers to file for Chapter 11 bankruptcy, a solution the company heads had opposed.

 

     “I believe their best option would be some type of Chapter 11 bankruptcy, where they can renegotiate – get rid of the management,” Shelby said on CBS’s Nov. 24 “The Early Show.”

 

    Now, according to Bloomberg, two of the big three automakers are receptive to the possibility of Chapter 11 bankruptcy.

 

     “General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, said a person familiar with their internal discussions,” James Rowley and Linda Sandler wrote for Bloomberg on  Dec. 4.