King Banian persuasively argues that this statement by President Obama on Chrysler’s bankruptcy was “utterly contemptible.”
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. And that’s why I’m supporting Chrysler’s plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success.
King points out that the holdouts that Obama was excoriating include Yale University’s endowment, the University of Kentucky’s endowment, and the Bill and Melinda Gates Foundation. Their crime? Investing in Chrysler when no one else would and insisting that they be treated as senior creditors under existing bankruptcy law.
They did so under the expectation that the rule of law would apply in America, that their place in line under bankruptcy law was purchased with that debt. President Obama’s ire over their unwillingness to give away that place in line — a place purchased by those endowments and foundations and pensions not for themselves but for students, pensioners and grant recipients — is an indication that the president thinks his noble ends are superior to theirs.
He points to a WSJ editorial arguing that “bankruptcy court, and not the political arena, is where Chrysler belongs.”
It’s especially rich for Mr. Obama to blast the creditors for seeking “an unjustified taxpayer-funded bailout” while offering the UAW a 55% majority stake in Chrysler. He also praised the large banks that hold most of the Chrysler debt and supported the government plan. But of course J.P. Morgan and the other big banks are also recipients of billions of dollars in taxpayer cash and have a strong interest in playing nice with their creditor, Uncle Sam Obama.
The Chrysler creditors at least represent teachers, pensioners and retirees, among others. The Administration is advancing its own social and political agenda through its ever-deeper entanglement with Chrysler and General Motors. That explains why the government is giving 55% of the new Chrysler to the UAW’s retiree-benefit trust, a junior creditor, while those ahead of the trust in line get a mere 30 cents on the dollar.
One hopes the bankruptcy judges follow the law rather than giving in to this nonsense.
