Loans won’t cure Big Three’s ills

Regarding the consumer column “Double standard for two bailouts?” (Dec. 7):

It is inequitable that union auto workers have to give pay concessions in order that the Big Three firms receive a federal bailout, while nonunion workers at financial firms do not. That is only half the story.

The problem facing ailing financial firms involves a reduced value of their mortgage-related assets. A one-shot infusion of federal money fixes their balance sheets. They don’t have a labor cost problem.

In contrast, the dilemma facing the auto manufacturers is that they are not selling enough cars. Their problem is on the income statement, not the balance sheet. And giving the Big Three loans, the solution favored in Congress, won’t solve it.

If the feds want to bail out the Big Three, the government will need to give them something to produce. GM already makes hybrid buses. Transit districts can use more of them as well as the smaller airport-type vans, which all three companies can make. School districts can use new school buses and vans.

Loans on the basis of hastily drafted business plans to develop efficient cars tomorrow will likely delay bankruptcy rather than avert it.

Daniel J.B. Mitchell

Los Angeles