Posted on 05/01/2009 8:27:37 PM PDT by TenthAmendmentChampion
If the Bush White House had engaged in anything similar to what's being described here (actually, Hank Paulson did; the question is how much Bush knew), there would be calls for impeachment.
Maybe there should be similar talk now. As it is, the establishment media will more than likely work very hard to ignore this.
It should not be ignored. What attorney Tom Lauria describes is nothing short of chilling.
What follows is a rush transcription, omitting the intro and wrap-up niceties, of an interview today between WJR's Frank Beckmann and Tom Lauria, attorney for most of (at the moment) Chrysler's non-TARP creditors (audio is here; NYT link in transcript added by me):
Beckmann: So what's the matter with your vulture clients who are so greedy and selfish. Why won't they go along with this?
Lauria: Well, they bought a contract that says that they get paid before anyone else does by Chrysler. And they have been told by the government who is in complete control of Chrysler, oddly enough, that despite their contractual right, they do not get paid before everyone else.
So they are standing on their rights, standing on the law, trying to defend in effect what is the Constitution of the United States, to make sure that they get what they're entitled to for their investors. Story Continues Below Ad ↓
Beckmann: Tom, let me make the argument against you in another way. We've heard the President say this, "I wouldn't want to stand on their side." Ron Gettelfinger says "Everyone else has made concessions. These people won't; they're greedy." Why not take a concession that is being asked of everybody else and is being accepted by everybody else, including other hedge funds that had bought some of these bonds in Chrysler?
Lauria: Well that's a great question, because let me tell you it's no fund standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent, and that's a moving target.
I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That's how hard it is to stand on this side of the fence.
Beckmann: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.
Beckmann: All right.
Lauria: Now let me just tell you, to be clear, that we do not oppose the rehabilitation of Chrysler. We think it is vitally important that a company like Chrysler be protected to the extent that it can be within the framework of the law. I want to also say that we do not oppose the government backstopping or supporting the pensioneers and retirees and workers of Chrysler.
I actually think that in a troubled economic time like we're in, that is an appropriate role for the government to perform. What we do oppose, however, is the abuse of the bankruptcy law to coerce first-lien lenders subsidize the rehabilitation of Chrysler or the backstop of the obligations to the pensioneers and retirees beyond what they will do voluntarily.
And just to be clear, these clients of mine have agreed to compromise 50% of their first-lien position to help support the rehabilitation of Chrysler -- Contrary to what the President said yesterday in his new conference that "these people will not give to support the effort," they have agreed to compromise 50% of what they're owed to support the rehabilitation of Chrysler, despite the fact that they're under no obligation whatsoever to do so.
That is what we stand for, and that is what we're going to go to court to fight for.
Beckmann: OK, so they have offered to take 50 cents on the dollar. What are they being offered in return, and how does that compare to what other stakeholders, say the UAW, are going to be receiving?
Lauria: Here's the troubling circumstance here. My clients bought a position in the Chrysler capital structure that entitles them to be paid "first dollars out." That is, they're to be paid 100 cents of what they're owed before any junior creditors get a penny.
The government has offerend them 29 cents on the dollar, in the context of a restructuring of Chrysler that will send over $10 billion of value to junior claims. And when I say $10 (billion), that's a floor. As we're continuing to review the papers that Chrysler has filed in the bankruptcy court, that number may actually be more like $20 billion. So in other words, my clients, who are contractually entitled to 100 cents on the dollar, are being asked to take 29 cents on the dollar, while junior creditors are being offered somewhere between $10-$20 billion of value in the Chrysler rehabilitation.
Now I ask your listeners, what would they do if they were in our position?
Beckmann: Now Tom Lauria, let me cite a New York Times piece, I believe this was yesterday's New York Times. No, it's today's as a matter of fact. And it says about the creditors who are standing firm: "Many of them bought Chrysler debt for about 30 cents on the dollar." So what they're saying is, "Look, they got a discount to begin with. They're getting a good deal here. If they bought it for 30 and they're being offered 29, that's a great deal, better percentagewise than anybody else got."
Lauria: Well, what people need to understand, first of all, that that is only speculation. There are people who bought this debt at par in my group, there are people who bought this at 70 cents, there are people who bought it at other prices. But what people really need to understand is that the people who bought this debt are pensioneers, teachers' credit unions, personal retiree accounts, retirement plans, college endowments. That's who my clients act as fiduciaries for. And they make all kinds of investments. And as you can imagine in this economy, there are numerous of those investments that have gone bad.
This was an investment that people made based on their assessment of the assets of Chrysler, and the view that this was a very secure, very safe investment. And they bought a contract that said they would get a very low rate of return in exchange for that high level of security. So the argument about what they paid for their investment really is irrelevant.
The fact of the matter is they bought a contract that said "you're first in line, and in exchange for that you're going to get a very low rate of return." And I think everybody in this country should be concerned about the fact that the President of the United States, the executive office, is using its power to try to abrogate that contractual right. If the President will attack that contractual right, what right will it not attack?
Beckmann: You made a comment to me before we went on the air about the significance of this case as it relates to the Constitution. I'd like you to explain that to my audience.
Lauria: Well, look, there are kind of two aspects to that. The first is the right to property and the right to contract are kind of sacronsanct in this country. I think everybody understands that when you make a deal it's supposed to be honored, and if it's not honored you're supposed to be able to get protection in court. And what is happening here, through the force of the United States government, and that's what's disturbing about this -- I mean, private parties have contract disputes all the time -- but for the United States Government to step in, the Executive Office of the United States Government, who under the Constitution is charged with enforcing the laws to step in and try to in effect break the laws, I think we should all be concerned about that. That is a constitutional issue.
OK, number one. Number two, realize that our Constitution is premised on the notion that there is a balance between the three branches of government: the executive, the legislature, and the judiciary.
And what's going to be happening, in fact I'm going to have to go here, because I'm heading down to the bankruptcy court to start taking on this battle, which is of epic proportions. But what is going on here is you've got the executive branch coming into the judicial branch. And I think it is really important for the Constitution of the United States that people understand that the judicial branch can stand independent and interpret and apply the laws as it's required to do under the Constitution in the face of intense pressure from the Executive branch to do otherwise.
Beckmann: Tom Lauria, really appreciate it. Final question, will Oppenheimer Funds and Stairway Capital, your other two clients in this, are they committed to standing firm? I've got to believe they're facing the same pressure Perella Weinberg did before it changed its mind and said "Okay, we'll go along now."
Lauria: Well they are today, but the Executive Office hasn't called them yet and made threats to them. So, maybe by tomorrow I won't have any clients, and maybe this fight will be over.
Isn't stealing $10-$20 billion under threat of ruin a "high crime"?
Money quote:
I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That's how hard it is to stand on this side of the fence.
Beckmann: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.
BTTT!!!!!
Well...I guess that confirms what we all know....the "independent" White House Press Corp is NOT
One day Obama says Chrysler is going bankrupt, will reorganize and come back stronger than ever, and calls on everyone to “Buy America” so that our automakers can be saved. The next day Chrysler files for bankruptcy, and announces that it is going to sell most of its assets to Fiat, an Italian car maker. How is purchasing an Italian car “buying America”?
bio....Perella Weinberg Partners, the investment bank founded by Joseph R. Perella, the former vice chairman of Morgan Stanley, has been hired by the Federal Deposit Insurance Corporation to advise it on strategies and transactions to stabilize the banking system. (from scroogle.org search)
My, my, what an interesting web we weave....
If the executive branch of the government can nullify contracts through force and threat, then my social contract with this government is null and void.
Their UAW workers will be paid to loaf, but take a guess what is happening to the supply base and dealers. I heard we are putting another 85 people at my plant out for the duration, on top of hundreds already gone. That's going to be multiplied across the industry. Those monthly unemployment figures are going to be spiking up from this event alone...
I must have missed something.
What was Weinberg’s role in the Chrysler situation?
Top-down Marxist revolution?
Ruling Party, MSM Dogs Loosed On Enemies of Economic Justice
"Rightist running dogs of the bourgeoisie will be purged."
That's my "money quote" - because the larger lesson here is there is in fact nothing that this president will not attack. Heck, I am still not 100% sure he should be president - where's the birth certificate obama? He and his administration have shown a callous disregard for the Constitution more than once. Actually, that's an interesting idea. His recklessness and haste...fueled by the fear that his illegal presidency will come crashing down sooner rather than later???
He promised change in the campaign, and by-God, we're going to get change. That is perhaps the only campaign promise the little socialist has kept to date. I'm fairly certain this isn't the change the slim majority that swallowed his line was looking for though.
I “think” they must have been financially partnered somehow with Chrysler....and when they tried to get out of it....they got bullied....Is that a possible read? Anyone else????
That would be accurate if he had something to do with the bond holders, who got royally screwed on this deal.
Anybody still think this country isn’t being run by a Marxist dictator? Hugo Chavez ain’t got nothin’ on Obama.
Well...they are “investment bankers”.....
Ping worthy?
The Federal thugs and their mouth piece can only do it if people cower in fear or if the thugs by off the executives who then screw the investors in a “settlement.”
Either Americans stand up for the rule of law or they cower in the face of Leftist thugs. The same with all the constitution and all the elite’s attacks on it.
well said!
Until outrage appears nationwide in the newspapers - forget it!
This tactic of the Obama Thugarchy is exactly what he showed to the nation with Joe the Plumber. That action against Joe the plumber was not politics as usual. It was not attacking another “public figure” or candidate, it was a bold and shameful klege-march over the line innto attacking a citizen of the US DURING A CAMPAIGN.
The media covered it, obfuscated, created a focus on silly flyover-country Joe and his rediculous “dreams”. The media sang bed-time stories to the faithful that Obama doesn’t really mean “redistribution”...Yet in the same week where an incredibly bizarre and frightening scenario takes place with one of the two Presidential 747s, the “journalists” sit timid and affraid.
Obama feels he has free reign to threaten the wealthy and the middleclass and continue to sow a field of lies to the underclass and “uncurious true believers”. as and ELECTED president.
Why not questions, why no resistence? Why is it that workers, plumbers and ship captains are the only ones willing to stop these bloated polticians in mid sentence and demand,”Your facts don’t make sense- what are you saying?!”
Now...
Obama, his media and entertainment network work fast and furious to be our country’s Iago. (Are there ironies in THAT statement?) Continuing to wax Shakespearian, it is time to end this Hamletesque disbelief, shock and hesitation; waiting for politicians, courts and media to resolve what the Constitution guaranteed it’s citizens the right, the responsibility to resolve. And parodying Hamlet, “The Tea Parties are the things wherein we’ll catch the conscience of the self perceived king “
Prophetically, Obama in a quote regarding Alito’s USSC nomination expressed the very failure that allowed him to be “placed “ in office,
“.... its duty not just to the Senate but to the American people to make sure we can thoroughly and adequately evaluate the record of every single nominee who comes before us.”
This cannot be allowed to continue unopposed. As the three branches of our government collapse into one single colluding deceitful body rushing to dress in the mantle of European socialist elite, the citizens must once again shoulder the responsibilities, concepts and confidence found in our Constitution and show the career politician an accurate translation of “reset” .
See you at the Tea Parties.
Yes, vitally yes. Well put!
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