Loans to automakers include risks

WASHINGTON, Dec. 9 (UPI) -- Conditions attached to the proposed $15 billion in automaker loans put the U.S. government close to the concept of nationalizing the industry, observers said.

The loan package, not yet voted on, includes the appointment of a "car czar," who would monitor major expenditures and guide the direction of the industry.

"I don't know that we've seen anything like this since the government told the automakers what kind of tanks to make during World War II," Professor Jeffrey Garten at the Yale School of Management told The New York Times.

"We don't want government to run companies," U.S. President-elect Barack Obama said Sunday on NBC's "Meet the Press."

But, the risks include billions of taxpayer dollars put into companies that still could fail, the Times reported Tuesday.

"Think about this: Who in the federal government would have the tremendous insight needed to fix this industry?" said Malcolm Salter, a professor emeritus at Harvard Business School.

The conditions, however, shift the balance between free enterprise and government control.

"We're at this moment in history, in which the Chinese are touting that their system is better than ours," Garten said.

"And our response, it looks like, is to begin replicating what they've been doing."