Last month, as the federal takeover of Detroit was beginning to play out, I wrote “President Barack Obama’s auto industry policy promises to heighten the influence of lobbyists and to open the door to ethical transgressions and even outright corruption” and “Predictability, precedent and the rule of law have been replaced with the fiat of politicians.” It’s common sense that putting the government in charge of a company opens that company up to all sorts of politics.
Today the Wall Street Journal editorial page reports that Rep. Barney Frank has successfully leaned on GM to keep open a warehouse it planned to close. The Journal frames the problem aptly:
Mr. Frank’s spokesman, Harry Gural, says the Congressman discussed, among other things, “the facility’s value to GM.” We’d have thought that would be something that GM might have considered when it decided to close the Norton center, but then a call from one of the most powerful Members of Congress can certainly cause a ward of the state to reconsider what qualifies as “value.” A CEO who refuses the offer can soon find himself testifying under oath before Congress, or answering questions from the Government Accountability Office about his expense account.
Of course, this isn’t the first time Frank has used his perch to fix car-related problems for a friend (see point 7 here).
