The Citi Never Sleeps....next GM, Ford, Chrysler?

We are finally watching Chapter Two of the 'bail out' of failed businesses (a.k.a. corporate welfare) with the recent decision to inject $20B into the failed operations of CitiBank. Now please do not misunderstand my position. I once worked for CitiBank as a VP and I only have the greatest respect for the organization's talented and hard working staff. My complaint is with government policy as it relates to the key tenets of a free market capitalist system. To allow a financial system to favor businesses by allowing them to privatize profits, while at the same time, socialize loses does not strengthen the backbone of a free market economy. CitiBank made it through a similar crisis back in the late 1980s/early 1990s. At that time, CitiBank was saddled with the default of large baskets of loans in South America. It might interest you to know that, while dealing with the South American Loan defaults, numerous savings & loan banks were bought by the bank at 'fire sale' prices and absorbed into CitiBank's infrastructure after they were taken over by the FDIC & the Resolution Trust Corporation. It appears that CitiBank got through that crisis, without government welfare, just fine! Why the change in policy? Perhaps they were able to hire more influential lobbyists? This is setting a very bad precedent. Where does this all end? What is the "endgame"? It is chilling to consider the ramifications over the long-term!

Now what about the big three auto makers? Appearing on almost every major news channel, including NBC, CBS and CNN, Daniel J. Ikenson, of the CATO Institute, explains why the auto companies should not receive a federal government bailout. Ikenson writes that there's nothing wrong with letting one of the "Big Three" go down:

The "Big Three" auto producers - Ford, Daimler-Chrysler and General Motors - want the public to believe their industry faces an existential threat. It doesn't. They want the public to believe they are innocent victims of circumstances beyond their control. They're not. They want the treasury secretary to authorize a fresh $25 billion bailout for the industry and the President-elect to pledge support for their parochial cause.

After appearing on TV against the bailout, Ikenson received a letter from a viewer who disagreed with him. Here is his reply.

The fact is that much of the Big Three's problem is self-made. The credit crunch and the contraction of demand is just the latest dark cloud, and a problem that affects all industries, not just autos. Thus, if there is a bailout for Detroit, where, how, and why do we draw the line to exclude other manufacturers, home builders, coal miners, and masseuses, who are all suffering from the same contraction in demand caused in part by the credit crunch? Don't tell me we should bail everyone out. For starters, we can't afford that.

Meanwhile, Daniel J. Mitchell debates in opposition to an auto industry bailout on NPR.org:
Consumers, acting in the marketplace, should determine which companies succeed or fail. Business success should not depend on which companies can hire the slickest lobbyists.