Shelby: Gov’t Help For Lehman Bros. Is Okay, But Not For Automakers

Sen. Richard Shelby (R-Ala.) backed government efforts to aid the takeover of embattled investment firm Lehman Brothers, but he said that government intervention shouldn’t involved taxpayer money and shouldn’t be offered to troubled car makers.

“The government right now, Treasury and the Fed among others, they’re trying to work a deal with no government money, as they should,” said Shelby, the ranking Republican on the Senate Banking Committee, on Fox Business Network. “I hope that works. But a little money would be better than a lot, but no money at all by the taxpayers would be the best situation.”

Government officials are talking to potential buyers of Lehman Brothers, which has suffered about $7 million in losses over the past two fiscal quarters. The Treasury Department has already engineered bailouts this year for investment bank Bear Stearns and mortgage companies Freddie Mac and Fannie Mae.

Shelby, like other Republicans, voiced disappointment over the increased role of government in the finance and mortgage sectors but he stopped short of condemning it.

“The government never regulated, you know, the Treasury, the Fed, the — never regulated the investment banks. Now they’ve got a window there, they’re involved in everything,” Shelby said.

He added: “I wish that we had a doctrine that nothing was too big to fail. Would it cause trouble? Will it cause heartache? Absolutely. But the market would react and recover much quicker than we’re doing trying to nurse patients back to health.”

Shelby said that the government should draw the line when it comes to helping troubled car makers. The companies, seeking to retool factories so they can build more fuel-efficient cars, plan to lobby the Senate on Friday for taxpayer-funded loans.

“I would say no to them,” Shelby said. “I think they’re not too big to fail. They’ve got a lot of chance now to retool. It costs money. They’ve seen this coming a long time.”