An Analysis of the 2009 Auto Bailout Essay

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I. Background
The three major Detroit-based manufacturers of the American automotive industry, General Motors, Chrysler and Ford, are jointly referred to as the Big Three for distinguishing their operations from those of competitors in terms of size, sales, geography and profits. In early 2009, the Big Three found themselves covered in debts and losses as the U.S. Government handed them an initial bailout package worth $25 billion to rescue them from bankruptcy (Isidore).
Through an analysis of the ethics behind government bailouts and an evaluation of arguments for and against the decision to give out such a package to the auto firms, I shall argue in this paper that, given the circumstances in which the decision had to be hastily made,
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These loans and fiscal backings provided short-term operating cash for the firms and kept auto-loans available for future consumers.
Prior to the Federal Deposit Insurance Act (FDIA) of 1950, federal regulators could take only one of two approaches for dealing with an insolvent corporation: force permanent closure of the firm, or encourage other firms to purchase the dissolved one. The FDIA made it possible for the government to provide assistance to firms through loans and asset acquisition until they recovered and performed better. As this third option involves the directing of public money into salvaging private corporations, its application has been a matter susceptible to great contention since the act’s creation.
Thus, ever since its approval, the auto bailout package has given rise to widespread debate concerning the ethics of governments aiding firms in distress. Those who root for the government bailout argue on consequentialist grounds and bring to light the severe negative long-term effects of the firms going bankrupt in the absence of external aid. A cost-benefit analysis of the effects of giving out aid versus letting the companies go bankrupt is often a key element of such arguments. Those who argue against the bailouts base

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