In the end, it may have been about not wanting to throw good money after bad. But it looks more like the defeat of the $14 billion bailout for automakers came about simply because it was a bad time to be asking for a handout. Wall Street already used up the available goodwill.

While the House passed the measure, the Senate expressed a lot of concern that General Motors (NYSE:GM) and Chrysler created a lot of their own problems. They made bad choices in the cars they wanted to build, agreed to ever-higher wages and benefits for their workers, and were too slow to change with the times. A factoid trotted out is that Toyota (NYSE:TM) and GM sold the same number of cars last year, but Toyota made a $16 billion profit and GM lost $38 billion.

There was probably no bigger issue than senators seeking concessions from the auto workers. The unions agreed to wage parity with foreign automakers in 2011 when their contracts expire, but the Senate was looking for something more immediate, like next year.

Although the Senate's apprehension about giving away money without concrete concessions might be justified, when you compare it to the bailout of the financial services industry, are the situations really any different?

It can hardly be argued that anyone but Citigroup (NYSE:C) or American International Group (NYSE:AIG) got themselves into their predicament. Yet where they got bailed out two and three times, the automakers must now prepare for bankruptcy.

It may be necessary for union workers to take pared salaries, but you can't even compare the salaries of auto workers with those on Wall Street. A year after spectacular flameouts, bailouts, and blunders, John Mack of Morgan Stanley (NYSE:MS) and John Thain of Merrill Lynch (NYSE:MS) want to be seen as magnanimous for forgoing millions in bonuses.

Detroit didn't get its loans because it was paying for Wall Street's ills. Now the real possibility of bankruptcy looms before the Big Three.

That's not as bad as it sounds, and it's how things should have proceeded to begin with. The Big Three aren't going to disappear. They might become the Little Three -- and Chrysler may merge with someone else -- but bankruptcy protection would give them the opportunity to make the steep and deep changes that are needed, all without taxpayer assistance. Chrysler had previously hired bankruptcy specialists, and General Motors moved to do so yesterday. Ford (NYSE:F) wasn't seeking immediate loans for itself, but supported the effort because the fates of the three are so entwined.

Nor is all hope for a bailout lost. The White House will consider using the TARP funds to assist the automakers, something it had been reluctant to do previously. Fortunately, there is just enough money left over from the original allocation that Treasury was given to provide the loans the car makers want.

Assuming the world doesn't end with the defeat of the bill, and I'm betting it won't, the three automakers can emerge from this episode a lot leaner and stronger. Whether the taxpayers can escape another raid on their pocketbooks is the big question.

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