An Offer They Couldn't Refuse
"The enormous pressure and machinery of the US government" -- that's the phrase that Thomas Lauria, a lawyer representing some of Chrysler's "secured" bondholders, used in explaining why an unofficial group of Chrysler's creditors decided to withdraw from a court case contesting the terms Chrysler's reorganization.
It sounds -- complicated, doesn't it? Bankruptcy. Secured vs. Unsecured creditors. TARP. The whole alphabet soup of financial wheeling, dealing, and -- as it happens -- stealing.
Stealing? Michael Barone cut to the chase in his reflections on what's happening in the case of Chrysler:
"The White House, presumably car czar Steven Rattner and deputy Ron Bloom, is seeking to transfer the property of one group of people to another group that is politically favored. In the process, it is setting aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party."
This, as Barone colorfully but not inaccurately put it, is an example of "gangster government" in action. As The Washington Examiner noted, what just happened to Chrysler's secured creditors is something "right out of Juan Peron’s playbook."
"Like the Argentinian strong man, Obama muscled the owners and creditors out of a productive private company and gave it to union leaders, who will then fill his campaign coffers in gratitude for his generosity."
Yes, that's right. Barack Obama and his henchmen just handed the United Auto Workers 55 percent of Chrysler's stock. One of the biggest contributors to the Democratic Party now controls the company they bankrupted. And what about the "secured" bondholders -- the investors who accepted lower returns in exchange for the security of knowing they would be first in line to be paid back if something bad happened? The last time I checked, they were offered 29 cents on the dollar.
Why would the bondholders agree to this exercise in "spreading the wealth around"? This is where the "enormous pressure and machinery of the US government" comes in. It began with Barack Obama's public criticism of the secured bond holders who, he said, were "speculators" unwilling to make sacrifices others had to make. Imagine that: a President singling out specific firms for public criticism.
Article printed from Roger’s Rules: http://pjmedia.com/rogerkimball
URL to article: http://pjmedia.com/rogerkimball/2009/5/10/an-offer-they-couldnt-refuse