GoodFellas Motors

There's a great scene in GoodFellas when a bar owner asks local mob boss Paulie Cicero to be his partner, if only to protect the bar from Paulie's goons. Paulie claims to know nothing about the bar business, but what the hell, it might be fun. So, Paulie takes a piece of the bar and, um, we know what happens next.

Paulie's crew guts it from the inside.

They steal inventory, they use the place as a front, they force the original owner to borrow money against the bar, which they also steal. And when there's no money or product left to steal, Paulie's boys torch the place to collect the insurance. And no one can stop them because they're the mob and they make the rules.

Courtesy of the WSJ's intrepid reporters, what RSP and many others predicted has now been documented. Congress is feasting on GM because it can. Welcome to the new GM, better known as GoodFellas Motors.

Before Anonymous has a hissy fit, I know the analogy isn't perfect. Congress isn't doing anything illegal, there are no threats of violence, they're not literally going to burn GM down for the insurance, but the theory is similar enough. Congress makes the rules, Congress put up the money, so individual members demand GM serve the needs of their individual constituents. GM is now merely a conduit, through which public money flows to this or that politically powerful stakeholder. Of course, the MoC will pretend there was no undue pressure, that the sought after outcome was only the result of "a constructive dialogue" with the company. Just like the mob, you don't have "a constructive dialogue" with a Senator. You do what you're "asked" to do or the next call is from the IRS, or oversight committee counsel or the Paymaster Czar's office.

Normally businesses only succeed when they serve customers. Those days are long gone at GoodFellas Motors.

I've Never Been So Right So Quickly

Day four of Congress keeping its hands off of GM.

535 Automaker CEOs

Congress will definitely be able to keep its hands off of GM.

A Little Reality Check From the Cheap Seats

1) Obama didn't ask for this level of engagement with GM and Chrysler. He's not blameless, having voted for the various car company loans as a Senator but he didn't seek it out.

2) Dress it up any way you want, but Obama is choosing sides based on to whom he owes political payback. Republicans would do the same damn thing if they were in charge.

3) There is a fundamental, irreconcilable difference between those who believe car companies should be run in the "national interest" and those who believe they should be run on behalf of owners. The latter means profit consistent with property rights as understood at the time risks were taken. The former means whatever those in power decide it means.

4) For those who prefer less government involvement, Obama is not the one to worry about in this scenario. Obama's decisions are driven by two important dates: Tuesday, November 2, 2010 and Tuesday, November 6, 2012. After that, his interest will wane. Presidents come and go, but Congress is forever. As government involvement in GM and Chrysler expands (and it will only expand) an ecosystem of lawyers, bankers, activists, constituents, consultants, journalists, lobbyists, local/regional/state/federal officials, legislators and more will organize to pry special benefits (financial and otherwise) for themselves out of Treasury's position in Chrysler and GM. If you buy common equity in GM or Chrysler (if it ever goes public), you're a complete fool.