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HTWW: "I'm with Barney Frank on this one: No one asked the rank-and-file employees of Citigroup or AIG or Morgan-Stanley to cut their salaries in exchange for government handouts. Assembly-line workers at GM and Chrysler, on the other hand, must tighten their belts."
The fundamental question regarding a GM and Chrysler bailout is whether the funds will enable a restructuring that can transform US automakers into competitive and profitable companies in a global marketplace. It is simply a fact that higher labor costs put GM and Chrysler at a competitive disadvantage. That said, this is one of many problems. Simply put, current management has been terrible and needs to go. Bring in new talent with new ideas.
On the other hand, Citi, AIG, and Morgan Stanley have a unique set of problems. One problem they do not have is excessive labor costs among the rank-and-file that prohibit them from competing successfully around the world. That’s why no one asked them to cut rank-and-file salaries in exchange for government handouts. Executive compensation is another subject entirely.
