DM&E: Are Thune and Schieffer a couple of cry babies?

by Leigh Pomeroy

Minnesota, South Dakota, Montana and Wyoming newspapers are rife today with more mentions of the DM&E railroad and its subsidiaries. Commanding the most attention is an AP article going under the general headline "Senator blames competitors for loan rejection" or "Thune says competitors derailed loan" or "Sen. Thune: Competitors helped kill DM&E loan."

How this all started is when Sen. John Thune (R-S.D.) managed to sneak a provision into the 2005 Transportation Act on behalf of his former client, the DM&E railroad. The problem is that it swelled a loan program for certain railroads from $3.5 billion to $35 billion, there was no discussion of it in either chamber of Congress, and almost no one knew about it except perhaps a few members of the House-Senate conference committee.

This little bit of behind-the-scenes chicanery was soon discovered and a chorus of objections were raised, led in part by the Mankato, Minn., Free Press. But by then most of the world felt that what would be a $2.3 billion gift of an uncollateralized loan at generous rates to the DM&E was a done deal. The congressional authorization was written in stone in the transportation bill, and everybody knows that you can't fight both the railroad and Congress — a.k.a. the sometime representatives of the people.

Well, a few folks thought otherwise, and today that loan has been squashed.

Those who have an intimate knowledge of the process know that the reason why the Federal Railroad Administration did not approve the loan was purely based on the numbers. The DM&E simply couldn't guarantee that it could pay the loan back. While opponents of the loan were hampered because they did not have access to the DM&E's corporate finances, they did have enough information for a few studies. It was clear, for example, that the DM&E, while showing a profit on its current operations, would be vastly overstretched were it to take on the extra $6 billion in debt ($2.3 billion from taxpayers) it was seeking.

Despite the nuts-and-bolts decision the FRA made on the DM&E's creditworthiness, there was lots of politicking happening on both sides of the issue. What it came down to, at least in the press, was: My friends are more powerful than your friends. But ultimately this should not have had anything to do with the FRA's decision — and probably didn't.

That's why it's laughingly funny when Sen. Thune, who started this whole process by trying to game the system, complains when others — he points to the BNSF railroad in particular — decide they're going to play by the same rules.

Thune and DM&E CEO Kevin Schieffer have to understand that if they're going to play ball on the big boys' playground, the big boys are not necessarily going to let them win. And if they get knocked down because the big boys teach them a lesson or two, it does little good to go to mama media crying.

Instead, they should pick themselves up and dust themselves off, go back to their own playground, get darned good at the game, and then maybe — just maybe — the big boys will say, "Hey, we like the way you play. Wanna come play with us?"

That's how it works with sports, and often with politics and business. The bottom line is: If you're not ready for the big-time, it doesn't mean you can't try. What it does mean is that if you get slapped down, no one's going to have any sympathy if you go crying to your mama. You just have to get up, figure out what you can do, and try again.