There is no reason why Detroit could not have been made a party to Obama’s bailout of GM. In which case, the City could have been assisted by Obama laying down a system of contracts that would have given Detroit an asset and/or revenue source that would have helped its financial health and maybe even avoid bankruptcy altogether.
Creating participatory “food chains” for the purpose of funneling federal funding to its ultimate recipient are nothing new. Obama could have easily given the money to Detroit with the understanding that the bail out money would then be given to GM. Then, maybe, say, Stock purchased could have been held jointly in the name of the Federal Government and the City of Detroit or split 50/50. The addition of a highly rated stock (or loan) to the City of Detroit’s balance sheet may have even allowed them to secure a loan to maintain City services and stave off bankruptcy. To be clear, a portion of Obama’s bailout money could have been ran through the City of Detroit’s books (a 0% loan From the Federal Govt to Detroit) and called a loan from the City of Detroit to GM (a >0% loan from Detroit to GM) giving the City of Detroit a source of interest revenue. GM could have even postponed payments or let interest accrue. This too would have helped the City of Detroit’s financial standing.
Instead Obama wanted to play investment banker instead of responsible social custodian and now the countries Taxpayers’ are stuck with a massive stock purchase that the Federal government will probably never break even on. But sadly, even the highly devalued GM stock would probably still be a welcomed addition to the current financial statements of the city of Detroit!
But the bailout wasn’t structured that way or any one of an infinite number of ways that could have helped the City of Detroit. Why? I don’t know. If anybody told me that they never even considered that the City of Detroit might be facing trouble when GM was facing bankruptcy I’d have told them they were full of shit. When one of the largest corporations on the planet goes into bankruptcy of course the host municipality is going to be facing trouble!?!
GM got a Wall Street centric bail out. The bail out's structure was something a responsible, representative government would have never done.
Sad. And now the very 1%'rs that caused the problem will probably feed on the spoils. Most notably, a fire sale of the art held in the Detriot Art Museum.