Obama worse than Kissinger?

[a.kitman]

Outrage from who?

The press that is intimately involved in Obama's plans to embarass the senior debtholders that refuse to give away their rights.

[Drake Tungsten]

In an interview with a Detroit radio host, Frank Beckmann, Mr. Lauria said that Perella Weinberg “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”

In a follow-up interview with ABC News’s Jake Tapper, he identified Mr. Rattner, the head of the auto task force, as having told a Perella Weinberg official that the White House “would embarrass the firm.”

Read the thread, you ****...

[Drake Tungsten]

Property Rights Trumped By UAW In First Episode Of Gangster Gov't

By MICHAEL BARONE | Posted Thursday, May 07, 2009 4:20 PM PT

Last Friday, the day after Chrysler filed for bankruptcy, I drove past the company's headquarters on I-75 in Auburn Hills, Mich. As I glanced at the pentagram logo, I felt myself tearing up a little bit. Anyone who grew up in the Detroit area, as I did, can't help but be sad to see a once-great company fail.

But my sadness turned to anger later when I heard what bankruptcy lawyer Tom Lauria said on a WJR talk show that morning.

"One of my clients," Lauria told host Frank Beckmann, "was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight."

Lauria represented one of the bondholder firms, Perella Weinberg, which initially rejected the Obama deal that would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.

Gross Violation

This, of course, is a violation of one of the basic principles of bankruptcy law, which is that secured creditors — those who loaned money only on the contractual promise that if the debt was unpaid they'd get specific property back — get paid off in full before unsecured creditors get anything.

Perella Weinberg withdrew its objection to the settlement, but other bondholders did not, which triggered the bankruptcy filing.

After that came a denunciation of the objecting bondholders as "speculators" by Barack Obama in his press conference last Thursday. And then death threats to bondholders from parties unknown.

The White House denied that it strong-armed Perella Weinberg. The firm issued a statement saying it decided to accept the settlement, but it pointedly did not deny that it had been threatened by the White House. Which is to say, the threat worked.

The same goes for big banks that have received billions in government TARP money. Many of them want to give back the money, but the government won't let them. They also voted to accept the Chrysler settlement. Nice little bank ya got there, wouldn't want anything to happen to it.

Left-wing bloggers have been saying that the White House's denial of making threats should be taken at face value and that Lauria's statement is not evidence to the contrary. But that's ridiculous. Lauria is a reputable lawyer and a contributor to Democratic candidates. He has no motive to lie. The White House does.

Think carefully about what's happening here. 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. The only possible limit on the White House's power is the bankruptcy judge, who might not go along.

Michigan politicians of both parties joined Obama in denouncing the holdout bondholders. They point to the sad plight of UAW retirees not getting full payment of the health care benefits the union negotiated with Chrysler.

But the plight of the beneficiaries of the pension funds represented by the bondholders is sad, too. Ordinarily you would expect these claims to be weighed and determined by the rule of law. But apparently not in this administration.

What 'Empathy' Really Means

Obama's attitude toward the rule of law is apparent in the words he used to describe what he is looking for in a nominee to replace Justice David Souter. He wants "someone who understands justice is not just about some abstract legal theory," he said, but someone who has "empathy."

In other words, judges should decide cases so that the right people win, not according to the rule of law.

The Chrysler negotiations will not be the last occasion for this administration to engage in bailout favoritism and crony capitalism. There's a May 31 deadline to come up with a settlement for General Motors. And there will be others.

In the meantime, who is going to buy bonds from unionized companies if the government is going to take their money away and give it to the union? We have just seen an episode of Gangster Government. It is likely to be part of a continuing series.

http://www.ibdeditorials.com/IBDArticles.aspx?id=326589766764151

[chequita guevara]

Actions like this undermine the system. Eventually there no longer is a system. There is the whim of the leaders of the party at the top.

Hello, Mexico!

It can be overdone, but it was the willingness of Western governments to sacrifice some capitalists that allowed them to save the rest. Had they not done so, "we'd" be living in a socialist world today.

[Drake Tungsten]

Looks like Kitty was right...

Fund Managers Burned by Obama Now Say They Are Wary

May 20 (Bloomberg) -- Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.

“Lenders will have to figure out how to price this risk,” Schultze, 39, said in a telephone interview from his office in Purchase, New York. “The obvious one is: Don’t lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=asXxg9ZZRjv4&refer=home

[Jon Miller]

I didn't, and still don't, see anything wrong with that.

JM

[Drake Tungsten]

You don't see what's wrong with making it harder for corporations to issue debt?

[Jon Miller]

I see nothing wrong with making it harder for corporations to issue debt when the corporations are being catastrophically mismanaged and should be in bankruptcy.

Basically, the current system allows corporations to borrow and so maintain life far after they ceased to be competitive.

If they died, as they would if they weren't getting these loans, then new corporations, which were competitive, would arise to take their place.

JM

[KrazyHorse]

Jon, it makes more and worse bankruptcies more likely.

This is TERRIBLE news.

[Jon Miller]

bankruptcies for uncompetitive businesses.

JM

[Drake Tungsten]

You should be upset that Obama won't allow Chrysler to go into a real bankruptcy proceeding, then.

[KrazyHorse]

Bankruptcies where the bankrupted company is broken up for no other reason than the fact that lenders won't lend due to possible future government interference are WELFARE DESTROYING. And we are likely to see more of them now.

[Jon Miller]

What is being done with it? It is being dismantled and current contracts (with the union, for example) are being re-written.

That sounds like a real bankruptacy to me.

Is it a Special Banktuptcy? Sure.

But the business comunity should be careful that they don't allow corporations to screw it up as royally as as Chrysler has in the future.

I hope that this will result in a change, and that such corporations will no longer have the line of credit that they have had previously.

JM

[Drake Tungsten]

Is it a Special Banktuptcy? Sure.

It's amazing that you would excuse such a blatantly political abuse of executive power.

[Jon Miller]

Bankruptcies where the bankrupted company is broken up for no other reason than the fact that lenders won't lend due to possible future government interference are WELFARE DESTROYING. And we are likely to see more of them now.

Propping up a failed corporation, which doesn't allow it's death and the growth of new and competitive corporations, is future welfare destroying.

JM