A post by Pat
The President is miffed at private companies with senior debt ownership in Chrysler Corporation and let his irritation be known. They didn’t take the deal the White House offered. Obama chastised them and said “I don’t stand with them”. What’s that supposed to mean?
When they assumed the debt, the companies had the audacity to hope the longstanding bankruptcy laws of America would apply to their investment. The deal the government tried to foist on these companies would have given 30 cents on the dollar and a diminished ownership percentage. These companies are not TARP recipients. They have a fiduciary responsibility to protect their investors’ funds. The UAW which has not made great sacrifices will wind up with a 55% ownership of Chrysler. The federal government will have 10% ownership, Fiat 20%.
Obama Says Chrysler Holdout Lenders Speculated on U.S. Bailout
Today, an anonymous group of 20 Chrysler lenders calling itself the “Committee of Chrysler Non-Tarp Lenders†said in a statement they’d been treated worse than junior creditors during negotiations in violation of “long-recognized legal and business principles.†They said they were owed $1 billion. […]
“Our holdings in secured Chrysler debt are entitled to priority in long-established U.S. bankruptcy law, and we are obligated to our fund shareholders to support agreements that respect these laws,†the company said in an e-mail.
Chrysler’s dissident lenders have on their side the “absolute priority†bankruptcy rule, which holds that value must be distributed according to the legal priorities of the stakeholders. What riled the group that put out the statement today was the fact that junior creditors, consisting of a workers healthcare trust, would get equity in a new Chrysler entity while they would not. […]
By lashing out at the dissident investors, Obama is tapping into the public’s anger to make clear who’s to blame for Chrysler’s bankruptcy and to ratchet up pressure on hedge funds and financial firms likely to object to the plan in court, said Stuart Rothenberg, a Washington-based political analyst.
Yesterday the President laughed off the idea he wanted to expand government. How he wished he didn’t have to get involved with the auto companies. Well, he could have given more than 30 days for Chrysler to work out a deal with creditors or just step aside and let the bankruptcy laws work normally. Instead he tried to strong arm creditors to take the deal the White House wanted. I don’t know, maybe the hedge funds are being greedy. Business is business. The White House has the attitude it can make offers private companies can’t refuse.
VIDEO REPORTS:
Maria Bartiromo talks about the pressure on the private investors. She says the negotiations were politicized and asks an intriguing question about Ford’s ability to compete with a government-backed company.
Neil Cavuto and Gary Kaltbaum discuss why bankruptcy was not an option billions earlier.
great write-up!
my wife and i were watching this go down on fox this morning and we were just amazed at the white house response that the bondholders should just suck it up and take one for the team, rather than access their legal right to bankruptcy court. clearly this president has never run business or really been responsible to shareholders or investors. next bail out and socialist takeover with union payoff, GM.
rick
The public at large must be made to understand the absolute disconnect between what the gov’t said would happen and what actually did happen. Lacking any sense of perspective, the crowds are swayed by the sweet-talking con-man who says it will all be alright if we just do what he says (and anybody that has a problem with that must be a redneck racist). But the previous bailouts failed, one after another. If we had any wisdom, we’d be listening to the people who got it right last time, instead of the people who consistently led us astray.
Hmmmm…looks like the main idea is to rescue the unions, at the expense of the investors and the creditors and the taxpayers.
All I personally ask of our Federal Government is they protect me from foreign foes. Why do my Tax dollars have to go towards cleaning up free enterprise messes? Can we just send 99% of Washington DC home to the State they represent & have term limits for every elected official?
STOP! THINK!
Does anyone really believe that Obama has any instinct for business–or for that matter–work.
He is void of that experience – another set of experiences he’s eluded throughout life. He possesses that Liberal mindset who take the enterprises of everyone else in contempt. We’re full of them here in Boston.
Oh, and Lucyladley, Watch all treaties and conventions ratified or signed. The US, when signing a treaty, abbrogates the sovereignty – sovereignty, mind – of the states; each individually and collectively. That was one of the principal reasons for a Senate. If you can do nothing about the voters in your district (as I’m a non-person in Boston) pay attention to that aspect.
Sovereignty can go in a snap. (Forget the black helicopters, watch the blue UN birds or whatever country’s delegation they use to enforce a treaty.)
Good time to review the “Federalist Papers” to understand the various arguments at our founding.
OK, want some fun? Get a few friends together, each with a copy of the above and do a portion a week, like a book club. Whoever is out there is qualified and educated enough; many of founders didn’t have PhD’s (Piled higher and Deeper – if you think of BS, MS (more of the same.) And, I bet you’ll find yourself impressed and complimented by the friends you already have. Remember, the FF’s maintained collegiality even expressing different opinions.
Give it a shot, it might be fun.
What does it mean to be an “American” company? Sure, Chrysler employs Americans in plants here in the U.S., but Honda does too. Same with Toyota. All of these autos are assembled with parts that come mostly from asia. The owners of these companies are those who purchased stock – this can be anyone in the world. Why then is Chrysler singled out as an American company and therefore in need of saving? Guess who is the largest contributor to Democrat coffers: Unions. Guess which plants are unionized: the big 3. This is the Democrats paying back its supporters. This is vote-buying.
The Messiah, saving America from what?
He provided the controlling interest of 55% of Chrysler to the UAW, then He forced the bond holders ( you know, the guy’s who actually put up the MONEY for Chrysler) to settle for pennies on the dollar.
And don’t forget that He is saving all those autoworkers careers, except that 21,000 GM employees didn’t get that memo. They’ll get pink slips instead.
This is America?