Special Report
Three Cheers for Chrysler’s Dissident Creditors
Bankruptcy court beats Obama nationalization any business day.
(Page 2 of 2)
Finally, the President claims that — careful guardian of taxpayer dollars that he is — he just couldn’t give in to creditors who would “hold out for the prospect of an unjustified taxpayer-funded bailout.”
Another rhetorical slight of hand. According to the Wall Street Journal (in its news section, not its editorials), “The most compliant of Chrysler’s big creditors — among them J.P. Morgan & Co. and Citigroup — have received hundreds of billions of dollars in TARP aid.” For these big banks, the auto bailout is just a game of Whack-a-Mole in which they cave to the Obama administration here, but make up for it by getting second helpings at the bank bailout trough.
Most of the other creditors, by contrast, have taken no bailout money. That’s why some of them call themselves the “Committee of Chrysler Non-Tarp Lenders.” “None of us has taken a dime in TARP money,” their statement says.
If Chrysler’s lenders can’t get their contracts respected, other lenders will notice, and will be much less likely to fund big or small U.S. businesses, knowing that contracts can be so easily ripped apart by politicians. As an editorial in USA Today, a newspaper not known as a bastion of conservative or libertarian though, puts it, Chrysler’s creditors fighting the Obama administration “are not only defending their own interests, they are standing up for the principles vital to functioning credit markets.”
About the Author
John Berlau is Senior Fellow for Finance and Access to Capital at the Competitive Enterprise Institute and blogs at OpenMarket.org.
Letter to the Editor View all comments (56) | Leave a comment
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Bill| 5.8.09 @ 7:47AM
Contracts are stated promises to do something in exchange for something. They provide order and agreements. If unfairly taken apart why would anyone ever trust them again? Trust is earned and from my perspective Obama and many in congress have demonstrated that they can not be trusted. May the few with back bone and integrity stand firm for what is the law and what is right.
Indiana Alex| 5.8.09 @ 8:08AM
Contracts and laws are meaningless to liberals as they have no natural empathy.
Steve| 5.8.09 @ 8:20AM
Laws, contracts, whaddayou talking about? This is Chicago....er, Venezuela.....er, Obama's America. Gimme a break.
Son Of Sam | 5.8.09 @ 8:25AM
The TelePrompter In Chief and his idiot regime of traitors and tax cheats should take a "haircut" on their salaries AND the size of the so-called stimulus AND the omnibus spending bill. Seriously, why the hell is it that all of US have to "have some skin in the game" but this rat pack of envy coddling tax lice never have to give back ANYTHING?
stay strong until freedom dawns
Son Of Sam
http://www.geocities.com/samadamssos
Howard| 5.8.09 @ 9:18AM
I have clients who are liberal Democrats who have to take a huge haircut on their GM holdings because of the Obama rope-a-dope regarding greedy "speculators", i.e. bond holders. What a Hobson's choice, interest income needed for retirement, or helping out the proletariat, UAW workers.
WillG | 5.8.09 @ 9:35AM
First, a criticism, the senior debt holders are not dissident! They deserve their rights under the law, and that a dissident doesn't make!!
Second, congratulations to rule of the law. President Teleprompter may think he runs a banana republic, but he has lawyers and creditors to contend with.
I read an article last week titled "Killing Chrysler" at http://economicefficiency.blogspot.com/2009/04/killing-chrysler.html It really highlighted how bankruptcy is the best alternative for everybody, except holders of common stock.
GM may be wise to consider bankruptcy, if anything, it will keep President Teleprompters hooks from fulling sinking in.
Becky| 5.8.09 @ 9:39AM
If he'll steal for you, he'll steal from you.
UAW members have no shame, certainly its leadership doesn't. Now that they got what they wanted, why should anyone feel charitable enough to patronize their showrooms?
The chances of selling cars at the profits they want to the segment they want (sardine can lovers) and the amount they want has just been reduced.
Kenneth Ford| 5.8.09 @ 9:49AM
The future of the Chrysler bankruptcy in the court is undetermined. The senior creditors can sue for 100% return of their money and if the Obama administration pressures the judge to overrule the law and steal a large portion of their money that is subornation of a crime, an impeachable offense. That should give the President pause.
Ken
Anthony| 5.8.09 @ 10:04AM
The share holders and the bond holders, those who pay the freight, were going to be the big losers in Obama's socialist takeover paradise. This was a remarkable revelation and insight into how radical a president 52 % of Americans voted for. Yet, this brazen attempt at banana republic jurisprudence, practiced by the Harvard trained community organizer, was given a big yawn by the MSM.
A big BRAVO to the holdouts, finally, people with guts enough to stand up to this tyranny. Now it's time for the rest of us to do our part; remember the adage about what happens when good people do nothing... Yes, Ms. Napolitano, do take notice.
Dustoff| 5.8.09 @ 10:26AM
Obama takes care of the unions, but slaps our dead law officers familes in the face.
+++++++++++++++++
The Obama administration wants to cut almost in half a benefits program for the families of slain police and safety officers.
The president's proposed budget calls for cutting the Public Safety Officers' Death Benefits Program from $110 million to $60 million.
Bruce Thompson| 5.8.09 @ 12:24PM
A White Knight candidate would be Exxon/Mobil.
What does Exxon/Mobil bring to the table?
Money, money & more money.
Strong ties to the industry through mutually attractive enterprises such as Kurt Busch's Mobil 1 Dodge
http://www.nascar.com/drivers/dps/kbusch00/cup/
Strong, experienced management, something sorely lacking in the Obama administration!
It is an American company with the ability to easily outbid Fiat, an Italian company, in cash.
The ability to pay off the dealers it intends to drop and thereby avoid expensive and wasteful lawsuits.
The ability to pay off current liabilites to the dealers that will continue, thereby strengthening those dealer's balance sheets.
The ability to provide Exxon/Mobil customers with the kind of gas guzzling vehicles they have come to know and love, Dodge Hemi Chargers, Ram pickups, Jeep Grand Chrokees and Chrysler Gran Caravan minivans.
And they are used to being publicly reviled and still pressing forward.
Dustoff| 5.8.09 @ 12:31PM
I wonder how many people had 401K with the loan compaines who were just told to take a hike on what Chrylers owes them?
Thanks Obama. You just blew the banking system out of the water.
Pat| 5.8.09 @ 12:47PM
Two more dissident lenders caved in today with Oppenheimer being the more severly affected of the two - which leaves only 3 lenders reamining as holdouts on the Chrysler bankruptcy offer. But the Rule of Law has become the Rule of Special Interests. And we can gauge to what extent the special interests are running our government by grabbing the popcorn and watching this little comedy spin out.
The UAW are the winners here so far, it was ordained in advance last fall, even before the election and the resulting actions since then are just going through the motions with a few clever dance numbers. And the union isn't really wrong, that's what special interests do, their entire reason for existence is to promote the interests of their members over everyone else's. Some will say: "But they cheated, they didn't play fair, they bought their lawmakers". Yeah, but given today's America, your point is what?
Treasury Dept. officials called the various lenders to threaten them - Washington claims no way did they threaten, but then what was the purpose of the phone calls? "Hi, this is the Treasury Dept., how's the weather, any exciting plans for the weekend?"
The question might be how can an average citizen, an everyday taxpaying Joe or Jill, like ourselves, join a Special Interest and bribe Washington to throw some goodies our way? Many Americans and a majority of Conservatives still believe in the Rule of Law despite all recent evidence to the contrary. But, when everyday politics becomes "Play for Pay" and without even minor embarrassment, how long can we cling to our illusions?
Richard Baker| 5.8.09 @ 1:02PM
De Toqueville said (paraphrasing) that when the people in America discover that they can vote themselves money from "the public purse" then our system would crumble. Barack the dictator is feeding this notion, for power, that everyone is owed something and that the government will just go out and get it for you. Nothing is built or advanced except the sharing of misery, as Churchill said. As they say in New Hampshire, "Live Free or die!"
2 Guns, AZ| 5.8.09 @ 3:55PM
I give Fystler 2, 3 years, tops.
DaveS| 5.8.09 @ 4:31PM
BHO is playing all-in with everyone else's money. Even if there are no 'dissidents' (i.e. Americans with spine to go against the government) left, Chrysler is dead as a doornail. Let that be the first albatross across the President's neck.
ds80| 5.8.09 @ 6:25PM
Gosh, with the diss'in he took from Chrylser's secured creditors, Michelle O'Mama will prolly have to kiss the Pre-School President's boo-boos.
Hmmm. Can teleprompters cry?
Ty Knoy| 5.8.09 @ 6:58PM
Wouldn't this Chrysler deal, if rammed through, destroy credit markets? Who in their right mind would ever buy a bond again? Could this become a model for financially distressed school districts? Repudiate bonds and give the bond servicing money to teachers unions? No money could ever be raised again for the construction of a school building.
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Gazinya| 5.8.09 @ 8:24PM
Now this is precisley why The Obama has decided not to help his African brother. Brother Obama makes $1 a month. Now if The Obama were to give his brother a 'bail-out' of, oh let's say, $3 a month how would that show a proper use of empathy.
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Richard Baker| 5.10.09 @ 7:47PM
Hooray for the dissident creditors! While these fund managers do make commissions off of their activities, they represent millions of, usually, small investors who put their money in to get a decent return on investment for retirements, educations for their kids, and such. The attempts of the Communists in DC is to buy more votes and tell the investors to go buzz off, it's not your money. Keep your powder dry, folks. We are headed for tragedy as between the productive millions and the non-productive leeches. Oh, don't think this is a racial thing. I had a black senior NCO in the Army, years ago, tell me that being a jerk doesn't have a color. Bad actors don't have a color either.
Christopher Holland| 5.11.09 @ 1:36AM
So union members are supposed to feel good that their union owns majority stock in GM and Chrysler! If that isn't drinking from a poisoned chalice then nothing is. Personally, I don't think much can be done when people are that stupid. They rarely have to wait long before reality catches up to them and kicks them in the backside.
Richard Baker| 5.14.09 @ 2:17AM
My Detroit cousins told me in 1985 that Americans should buy American cars no matter what. When I said that the American cars were not as well built as the foreign cars they said what about us? That mentality then and now has the UAW acting as if destroying the auto business is their right regardless as long as they got theirs. Did my cousins think that overpricing and underproducing were going to last forever? The Detroit auto companies are disappearing because the manufacturers gave in for "Labor Peace" and the UAW din't care about the future. Well. the future is NOW and Detroit did it to itself.
Richard Baker| 5.14.09 @ 2:19AM
didn't, not din't.
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Stone| 1.26.10 @ 1:53AM
Absolutely agree with William.They deserve their rights under the law.And congratulations to rule of the law. President Teleprompter may think he runs a banana republic, but he has lawyers and creditors to contend with. acer batterycompaq battery
394224-001 | 3.9.10 @ 11:23PM
Come on,you will get more!