« A Turning Tide: Tea Parties Got It Right | Main | Late Thoughts »

Chrysler Bondholders May Challenge Obama

This is encouraging. George Schultze, an unintimidated critic of the President Obama's possibly illegal maneuvering in the Chrysler bankruptcy negotiations, may have some big name allies.

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 under funded 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."

Former GE CEO Jack Welch observed the obvious:

Jack Welch, former chief executive officer of General Electric Co., criticized how the government handled Chrysler's bankruptcy, saying unions were favored at the expense of creditors.

"I didn't like the terms," Welch, 73, said in an interview yesterday at the Boston Convention Center. "The creditors' rights were trashed and the unions got 55 percent of the company."

Bloomberg uncharacteristically noted another hard to ignore dilemma:

The struggle between creditors and labor has also reached Hartmarx Corp., the 122-year-old clothing maker in Chicago that made the suit Obama wore to his inauguration. Unions are gaining government support in a fight against Wells Fargo & Co., the bankrupt company's lender.

More than 30 members of Congress, including House Financial Services Committee Chairman Barney Frank are urging the San Francisco bank not to liquidate the clothier, according to Representative Phil Hare, an Illinois Democrat. The lawmakers are also seeking Treasury Secretary Tim Geithner's backing.

President Obama has created a choice for tax payers with his handling of the Chrysler bankruptcy: Do you want a permanently government subsidized, managed and financed auto industry or an independent one? With the Hartmarx deal, it has to be asked: Where does this administration and Congress draw the line? Is your job next? Or is it your savings that are next at risk? The private sector has for decades resolved these questions in Federal Bankruptcy Court but the Obama administration claims it knows better and deigns to assume this responsibility itself. Does this policy put the nation in better hands?


TrackBack

TrackBack URL for this entry:
/cgi-bin/mt-tb.cgi/35755.

Listed below are links to weblogs that reference Chrysler Bondholders May Challenge Obama:

Comments (25)

"Is your job next? Or is it... (Below threshold)
Jake:

"Is your job next? Or is it your savings that are next at risk?"

There's that trademark of modern conservatism... fear!

Honestly, I'm not sure how I feel about this issue. I can seen concerns on both sides of the debate.

I just wish everything didn't have to devolve into "Oh, scary scary!"

Jake, does illegal sound be... (Below threshold)
Zelsdorf Ragshaft III:

Jake, does illegal sound better to you? Where does the executive branch of the government get the authority to do what it is trying to do? Not from any legal document. In America, government does not own or involve itself in business. That is according to the consititution. Or is that something Obama does not recognize? What does this criminal have to do before you think it is wrong?

"What does this criminal ha... (Below threshold)
914:

"What does this criminal have to do before you think it is wrong?"

Turn into George Bush.

And Jake, its not a debate.... (Below threshold)
914:

And Jake, its not a debate. More like a hostile takeover.

"Is your job next? Or is it... (Below threshold)
LaMedusa:

"Is your job next? Or is it your savings that are next at risk?"

Yes and yes. It's not at all a fear thing, it's a time to fight back thing. This stuff is going to keep happening and too many people are in the dark as to what it really means. It's time for people to rethink anything and everything that could be next on the list as "government owned".

"There's that trademark of ... (Below threshold)
JB:

"There's that trademark of modern conservatism... fear!"

Right...as opposed to modern "progressivism". In this economic crisis we must "act", or we're doomed!

Bondholders are not big cor... (Below threshold)
Bob:

Bondholders are not big corporate CEOs. By in large they are either individual investors or pension plans. When the O-Team cheats bondholders to please the unions, they hurt real people and help to wreck a system based on law and free enterprise. Phil Hare is a Western Illinois Congressman whose job is totally dependent on union support, and he's typical of the Dems who are backing the systematic attack on investors in favor of unions.

As I pointed out in the Ted... (Below threshold)
JLawson:

As I pointed out in the Ted Kennedy post - the folks who are fumbling blindly with our economy can't even keep track of the progress of a fellow politician's cancer.

What realistic hope do we have that they'll have both the integrity and the knowledge to do what is actually RIGHT for the economy as opposed to what's either expedient or keeps their special interest groups happy?

What's interesting here is ... (Below threshold)
bobdog:

What's interesting here is that these are union pension funds. Let's see, shall we screw this union or that union?

I think Obama has painted himself into a corner, although I think the UAW will win because of its support during the election.

The real issue here is the one raised above: just where does Obama and Congress get the legal authority to abrogate black letter bankruptcy law? Where do they get the authority to replace executives? Where do they get the authority to give equity ownership of Chrysler and probably GM to the UAW at the American taxpayers' expense?

I watched portions of Mr Sm... (Below threshold)
epador:

I watched portions of Mr Smith goes to Washington yesterday, and it made me cry inside to compare this to now. Then Vertigo was on, and I think we're in the the midst of being used by a doppelgänger, but we're all going to end up taking a suicidal plunge off the top of the tower.

I need Prozac. There's a tall thin newcomer with big ears in Washington, only he has his own agenda and the press hasn't stopped its love affair yet.

One of the charges against ... (Below threshold)
Mac Lorry:

One of the charges against Nixon was that he abused power by sicking the IRS on his political opponents. Now Obama is threatening to sick government agencies on private companies if they don't agree to his demands. These companies didn't take any of the toxic TARP money and they have the law on their side, so this is coercion. This is more that an abuse of power, it's extortion and it's a crime. If Bush did this the left would be howling for his impeachment.

@JB said "Right...as oppose... (Below threshold)
Jake:

@JB said "Right...as opposed to modern "progressivism". In this economic crisis we must "act", or we're doomed!"

Just a point of reminder: The initial stimulus was created under the Republican administration. They were the ones that started that "must act or we're doomed" line regarding the financial crisis.

What bothers me about this "there wasn't really a crisis, we didn't really need to act" line of thinking is that it's not about logic, it's about anger and poor sportsmanship. Your guy lost, and now you're slinging an unwinnable standard at the winner.

If Obama hadn't acted, saying "there's no crisis", conservatives would be raging mad at his inaction.

If he acts, in any form, he's a Socialist.

If he acts, and it works and the (apparently non-existent) crisis subsides, then the meme that there was never really any crisis and he was just overreacting kicks in.

There is absolutely ZERO win for him (from a political/discussion standpoint), is there?

@Zelsdorf: "In America, gov... (Below threshold)
Jake:

@Zelsdorf: "In America, government does not own or involve itself in business."

That's a joke, right?

"...just where does Obama a... (Below threshold)
Jake:

"...just where does Obama and Congress get the legal authority to abrogate black letter bankruptcy law? "

Apparently the same place that Bush/Cheney found the ability to monitor, disappear, torture, and suspend habeas corpus on citizens and non-citizens.

That aside, I don't like the idea of the government playing in private business. But you all make it sound like Big Bad Obama walked around with his magic stick touching the companies he wanted to meddle in. These companies came to the government for help. They *asked* the government to participate in their businesses. They might not have liked the terms he was giving them in order to be willing to give them large sums of money, but they agreed. Buyers remorse does not retroactively create government seizure.

As far as the Nixon/Obama reference - I don't think that the comparison is fair. Nixon was doing things in private as a purely, 100% political. Now, while anything any politician does has a political component to it, the difference here is that Nixon was hiding, Obama is announcing. Inherently it's not the same.

The govt should stay the he... (Below threshold)
JC Hammer:

The govt should stay the hell out of business. But since the previous admin opted to bail out Wall Street, the auto industry just happened to be next. Now the newspapers, then what next?

Let them all go bankrupt, and what would happen to our economy, get worse or better? It wouldn't matter if McCain would have won, he also would have had this mess on his hands.

A lot of criticism, but no different ideas from the party of "NO". Just like the GOP budget plan with NO numbers.

It's called dictatorship. W... (Below threshold)
OLDPUPPYMAX:

It's called dictatorship. When the rule of law is replaced by the rule of one individual, it is a dictatorship. Not exactly complicated, but it is certainly scary as hell. And the "collective" response of our non-biased media? ZZZZZZZZZZZZZ

@ OLDPUPPYMAX : "It's calle... (Below threshold)
Jake:

@ OLDPUPPYMAX : "It's called dictatorship. When the rule of law is replaced by the rule of one individual, it is a dictatorship. Not exactly complicated, but it is certainly scary as hell. And the "collective" response of our non-biased media? ZZZZZZZZZZZZZ"

Were you talking about torture issues or economic issues?

Obama and company have gone... (Below threshold)
TOhio:

Obama and company have gone too far and I'm happy to see some businesspeople fighting back.

It's going to take every one of us standing up and speaking up against this narcissistic demagogue and his thuggish enforcers.

Don't think for a minute that Obama will stop at some point on his own. He will only stop when he is forced to.

The bond holders should con... (Below threshold)
LaMedusa:

The bond holders should continue to stand their ground. Obama is playing head thug here, portraying them as just "speculators" and "vultures" by congress. The very propaganda tactic here should tell people that their lively hood is at stake.

This confrontation could have been avoided if the Obama administration had treated the bondholders as equitably as the United Auto Workers, which gets far more money for the dollar.

The good-faith loans from the bondholders provided the operating capital for which Chrysler pledged its assets as collateral, an important role that the Obama administration wants to ignore as part of its forced restructuring program that favors the politically connected UAW.

These bondholders represent all forms of investors, from pension funds that guarantee the retirement income of workers, to banks and their depositors, to individual investors. It is likely some investors are from Michigan. Companies that invest money in firms like Chrysler have a fiduciary responsibility to represent their best interests.

That could be anyone with a personal interest in an investment that turns into a government takeover.

http://feeds.bignewsnetwork.com/?sid=496817

"Apparently the same pla... (Below threshold)
LaMedusa:

"Apparently the same place that Bush/Cheney found the ability to monitor, disappear, torture, and suspend habeas corpus on citizens and non-citizens.

Jake, this is the here and now. "Big Bad Obama" is using a government playbook to impose a government takeover of a business that has private investments at stake. If you want to keep inserting off topic comparisons that have nothing to do with the post, all you are doing is wasting bandwidth. What would you do, if your pension were involved in this mess, bitch about habeas corpus?

As far as the Nixo... (Below threshold)
Mac Lorry:
As far as the Nixon/Obama reference - I don't think that the comparison is fair. Nixon was doing things in private as a purely, 100% political. Now, while anything any politician does has a political component to it, the difference here is that Nixon was hiding, Obama is announcing. Inherently it's not the same.

It doesn't matter if Nixon was abusing power for private motives or not. What Obama is doing is more than just abusing power, it's a crime. Obama is paying back political allies through extortion of private companies.

I noticed that you like to claim something Obama is doing is ok because Bush did the same thing or worse. In doing so you are saying Obama is just as bad as Bush or that Bush did nothing wrong. Which is it?

Apparently the sa... (Below threshold)
Apparently the same place that Bush/Cheney found the ability to monitor, disappear, torture, and suspend habeas corpus on citizens and non-citizens.

Jake, this is the second posting you have made
accusing Bush. Where are your sources?
Unless you have documented information, don't
make them again on Wizbang.

Also you need to read the Geneva Accords,
where illegal combatants are concerned.

I noticed that you like ... (Below threshold)
John Irving:

I noticed that you like to claim something Obama is doing is ok because Bush did the same thing or worse. In doing so you are saying Obama is just as bad as Bush or that Bush did nothing wrong. Which is it?

It's called Obama Derangement Syndrome, the belief that nothing The Won can do is wrong. Sufferers are unable to recognize the cognitive dissonance, and have scratched colons from spinning their heads.


Good one, John.... (Below threshold)
Christina Viering:

Good one, John.

Bobdog: What's interesti... (Below threshold)
Les Nessman:

Bobdog: What's interesting here is that these are union pension funds. Let's see, shall we screw this union or that union?

Ah, but that's the beauty of the new power of The Won. Soon, any union that got 'screwed' will be taken care of with a fat TARP payout or somesuch gov't handout. Brocko will just keep handing out money.




Advertisements









rightads.gif

beltwaybloggers.gif

insiderslogo.jpg

mba_blue.gif

Follow Wizbang

Follow Wizbang on FacebookFollow Wizbang on TwitterSubscribe to Wizbang feedWizbang Mobile

Contact

Send e-mail tips to us:

tips@wizbangblog.com

Fresh Links

Credits

Section Editor: Maggie Whitton

Editors: Jay Tea, Lorie Byrd, Kim Priestap, DJ Drummond, Michael Laprarie, Baron Von Ottomatic, Shawn Mallow, Rick, Dan Karipides, Michael Avitablile, Charlie Quidnunc, Steve Schippert

Emeritus: Paul, Mary Katherine Ham, Jim Addison, Alexander K. McClure, Cassy Fiano, Bill Jempty, John Stansbury, Rob Port

In Memorium: HughS

All original content copyright © 2003-2010 by Wizbang®, LLC. All rights reserved. Wizbang® is a registered service mark.

Powered by Movable Type Pro 4.361

Hosting by ServInt

Ratings on this site are powered by the Ajax Ratings Pro plugin for Movable Type.

Search on this site is powered by the FastSearch plugin for Movable Type.

Blogrolls on this site are powered by the MT-Blogroll.

Temporary site design is based on Cutline and Cutline for MT. Graphics by Apothegm Designs.

Author Login



Terms Of Service

DCMA Compliance Notice

Privacy Policy