Deal me out

Virginia seems to have found an innovative way to latch on to some more bailout money for its citizens:

The Virginia General Assembly is well known nationwide for how badly they can mess things up and make themselves public laughingstocks (abuser fees, anyone?).  Well, it appears they are at it again- on an even bigger scale- this time jeopardizing the entire $25,000,000,000 (BILLION) national auto bailout.

SB1410 doesn't look that harmful on its face.  But dive into the bill, and you will be shocked at what one "Republican" is proposing to do to the free market.  Basically, the bill requires that if an auto manufacturer decides to stop producing a line of cars, they are required to buy back all of the unsold inventory that dealers have.  This bill eliminates all risk for auto dealers- and puts the entire risk on the manufacturers.  Why would anyone want to make any business totally risk free?  This makes no sense.

So, why introduce this bill now in 2009?  That answer is easy.  Car makers just received $25,000,000,000 (BILLION) in cash from the federal government.  The point of this cash outlay was to give them time to reorganize without declaring bankruptcy (i.e. possibly eliminate some lines of under-performing brands).  So this bill is basically a money transfer from the auto makers to the auto dealers should a line of cars be done away with.  If every state did this, the entire federal auto bailout would go to car dealerships instead of the manufacturers!!
Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A Stop-Motion Tour of New York City

A filmmaker animated hundreds of still photographs to create this Big Apple flip book

Video

The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"

Video

This Japanese Inn Has Been Open for 1,300 Years

It's one of the oldest family businesses in the world.

Video

What Happens Inside a Dying Mind?

Science cannot fully explain near-death experiences.

More in Business

Just In