Liberals have said over and over that former President George W. Bush acted above and beyond the scope of law. Being mindful that they have yet to say what laws Mr. Bush may have violated. But along comes the rock star president, B-Rock Obama and his band of merry men and laws just don't seem to matter. The point I am speaking to is the recent filing of bankruptcy of Chrysler, LLC. I wrote about the government allowing both Chrysler and General Motors to ease into bankruptcy in November. Back then it was said that these companies were too big to fail. I guess it depends on too big for whom! The taxpayers would have been on the hook for a lot less if they had gone into bankruptcy then instead of five months later. Now comes our president to tell us that it's gonna be o.k. because I have everything under control.
B-Rock has decided that it is in the best interest of everyone that he be able to spin the bankruptcy laws to once again choose winners and losers. I wonder what sort of law he studied, practiced and taught in his lifetime. He has decided that equity holders in this bankruptcy should get preference over secured creditors or bond holders. The bankruptcy laws already have a pecking order with regards to who gets paid first and it ain't the U.A.W. The bond holders are the first since they have secured debt. That debt is secured by the assets of the company. Stock holders have to get in line as their debt is unsecured. They were pledged nothing in return for their investment yet the bond holders were.
These bond holders were demagogue by B-Rock for not agreeing to accept about 5 cent for every dollar they are owed which is close to $7 billion. They would fair better in bankruptcy since they are the creditors that would receive any monies from the filing first. They could possibly get somewhere nearer to 40 cents or more on the dollar for their debt. Which chance would you take?
This is an attempt to prop up the United Auto Workers who in this scenario will be the largest shareholder in Chrysler with 55%. FIAT will be at 35% and the Federal Government at 8%. So the union would be deciding how to manage the company. Something about inmates and taking over asylums comes to mind here.
With the federal government involved you can bet there will be no more Chrysler 300's, Dodge Challengers or Dodge Chargers. We will see more lower horse powered 'green' cars. Cars that the American people have decided that at this time they do not want. Hybrids had a peak during last summers gasoline price spike but have seen even lower demands since gasoline prices stabilized.
Yet B-Rock said this, "While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them. I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices."
These investment firms and hedge funds could not be deterred because they recognize that they have a fiduciary responsibility to their investors to not sign onto a deal that would result in a huge loss to their portfolios. You may think that you have no interest in this filing and are not a bond holder but if you have a pension or retirement fund that may invest with one of these investment firms then you may have some financial exposure to this. If your investment firm decided to agree to these kinds of terms with the Obama administration then they could be certainly sued by their investors for failing to protect the investors from this huge loss in value. Your pension fund managers would be all over this loss because it would affect how much value your pension itself maintained.
These investment firms were also non TARP recipients and could not be bullied by the prospect of being blackmailed by Obama's Automotive Task Force. I say good for them. This bankruptcy filing is not their fault and for Obama to think he can dictate what happens in bankruptcy court rises to being 'above the law.' Bankruptcy law is already written and is followed by a federal judge who does not have to deal with the wranglings of politicians since they were not elected but appointed.
Since B-Rock once lectured as a professor at the University of Chicago, he should know that. But since his professional resume is thin it is possible that he spent this time writing books in preparation for running for president some day. Not studying or practicing law.
Finally when did we elect Obama as the CEO of Chrysler or any other corporation? I thought that Robert Nardelli should have been the one announcing the Fiat partnership along with the bankruptcy filing. But B-Rock, never one to be upstaged, took the reins and announced it to the American people. I don't recall George W. Bush announcing the United Airlines, US Airways, Northwest Airlines or the Delta Airlines filings. Shoot I don't remember him trying to tell those companies what to produce and how to run their business.
President Obama has blurred the line between the public sector and the private sector. If he wants to run a business then start with the one the federal government has owned for decades and continues to lose money; AMTRAK! Build that entity into a successful organization then just maybe many Americans will be willing to listen to you about running Chrysler, General Motors, or even America.
These are my words! Please post yours!