Remember the Escandalo Grande that ensued in December when Big Three CEOs promptly extended empty tin cups after de-planing in Washington, each from his own private corporate jet? It was but one signifier that these guys were out of touch, and it didn't inspire confidence that they would use billions in government assistance wisely. What was worse, not one of the three had a detailed, organized plan of how they would use massive assistance if it were granted. So Washington sent them packing, and when they returned for a second round of pleas, some showed up in hybrid vehicles produced by their own companies. Novel idea, huh?
Their second performance in D.C. garnered more respect and applause from lawmakers, and thus GM, Ford, and Chrysler have been granted a slice of the pie that is TARP, or the Troubled Assets Relief Program. Notably, this is same $700-odd billion pot that was created to pull the decimated banking industry from the brink of collapse (and steer the U.S., already in a recession, away from a depression). Public and legislative opinion were inches away from total disgust at the perks and privileges afforded high-paid CEOs in many failing industries, even as their workers were being laid off in droves. And so TARP had stipulations, one of which was that private jets for the big wigs (who are now, in many senses, wards of the Fed) were strictly verboten. Whether banker or auto builder, if you were receiving TARP funds, you'd need to fly commercial like the rest of us mortals.
It turns out that they build lots of private jets and the parts to assemble them in Kansas. VIPs in Kansas were hot about the TARP restrictions on private jets, claiming the ruling would reduce aircraft orders and force layoffs in their industry. And so the author of TARP, House Financial Services Committee Chairman Barney Frank, D-Mass., lifted the ban on ownership or leasing of private jets. But only as it applies to the bankers.
It seems a bit of a mixed message, as far as I see it; how is it that private jets make sense for banking execs, but not for auto industry execs? Says the Detroit News: "remember, folks: According to Congress, it's only a waste of taxpayer money if auto execs are the ones flying private."
[source: Detroit News]