Given the magnitude of financial support being extended to General Motors by the U.S. Treasury, there has been increasing debate in the United States about the best course of action.

A significant paper in the The Economists’ Voice¸ edited by Nobel prize winning economist Joseph Stiglitz, vigorously opposes most of the policy options being considered. Professors Joshua Rauh and Luigi Zingales resolutely oppose (a) the U.S. government exchanging loans for equity, (b) close oversight of GM by Congress, or (c) an unsupervised bankruptcy.

The University of Chicago business professors call instead for a closely supervised bankruptcy. In their proposal for a closely supervised bankruptcy, a commercial bank would manage the re-organization. The bank would do so under a contract with the government that rewards the bank for minimizing further losses and avoiding either a quick fire sale or further money-losing bankruptcy delay.

The careful reasoning of these business professors falls largely on deaf ears among the CEOs and business leaders on the COMPAS panel. Panelists’ preferences are largely for both the U.S. and Canadian governments to do nothing and let the market follow its own course.

These are the key findings from this past week’s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine under sponsorship of BDO Dunwoody LLP.

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