Some have called him the worst Secretary of the Treasury in U.S. History.

One thing is clear, Hank Paulson has been acting more like Santa Claus than a prudent financial manager. The financial bailout Paulson authored provided 700 BILLION dollars with absolutely no strings attached to U.S. institutions. The result has been disheartening. First AIG took its billions and celebrated with lavish parties for their executives and then came back and asked for more. The Banks have used their Billions to make acquisitions and pay bonuses rather than start lending the money to those in need. It is hard for anyone to understand how the Government could give over 300 Billion dollars to financial institutions and then not be able to convince those same Banks to provide a 15 Billion bridge loan to keep the big 3 auto companies in business.

The effort, led by Republican Senator Bob Corker (TN), would have restructured GM and given it a chance for survival. Although Ford does not need money immediately, Chrysler's survival is questionable. Corker and the Republicans felt that if they saved GM all three companies would be better off.

GM has over 30 Billion dollars in debt. Corker successfully negotiated with the corporate bond holders who agreed to take 30 cents on the dollar in return for stock in GM. This would have meant, both the bond holders and the stock holders, would sacrifice.

Beside the mountain of debt, the overriding problem at GM is the cost of labor. Workers in a GM plant receive compensation in excess of $ 70.00 per hour. At U.S. plants owned by Nisan, Honda and Toyota, the compensation is just over $ 40.00 an hour.

Corker had negotiated with the UAW to agree to a new "competitive" compensation plan. The new Secretary of Labor, appointed by President-elect Obama, would be the judge of what was "competitive". Since the UAW had spent more than 100 million dollars to get Obama elected, the feeling was that the new Secretary would be more than fair to UAW.

Miraculously Corker got everyone to agree. When it came time however to set deadlines the Bond Holders agreed to March 15th. But the UAW would not agree to any date. The deal subsequently fell apart.

The only way that the American auto industry will survive is to FORCE a reorganization. The way to do that is not through a Bridge Loan but through a Chapter 11 Bankruptcy reorganization.

The steel industry and airlines survived Chapter 11. The Public Relations damage that Chapter 11 would bring the auto companies has already been done. Sales have all but stopped as customers see the "Big 3" teetering at the edge of financial ruin.

The airlines did it right with speed and efficiency. Customers will respond if the auto companies do the same.