Posted on 05/05/2009 1:34:23 PM PDT by CAD Daddy
http://hotair.com/archives/2009/05/05/lauria-allegations-of-threats-corroborated/
Creditors to Chrysler describe negotiations with the company and the Obama administration as “a farce,” saying the administration was bent on forcing their hands using hardball tactics and threats.
Conversations with administration officials left them expecting that they would be politically targeted, two participants in the negotiations said. …
The sources, who represent creditors to Chrysler, say were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person said described the administration as the most shocking “end justifies the means” group they have ever encountered. Another characterized Obama was “the most dangerous smooth talker on the planet- and I knew Kissinger.” Both were voters for Obama in the last election.
One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.
Some hedge funds are, but in the Chrysler case, these are investment firms that lent Chrylser money. The money that was lent was not their own, but most likely from employee pension plans, college endowments, etc. It is their fiduciary duty to get as much of their clients money back as possible. If these firms said that they would rather the UAW get their money for the “common good”, they would be sued. It is very easy to demonize “hedge funds” just like Obama is doing. All investment firms are not corrupt hedge funds.
The only mystery is why conservatives think there is some grand principle involved, or that they are scoring. It is the dumbest sort of fight to pick. It simultaneously makes them look like all they care about is absent moneybags to mainstreet and that they don't understand business or finance to business.
If the democrats picked the issues the right was to stand on over the last 4 months they could not have done a better job than conservatives did to themselves. Just clueless.
This isn’t a political issue, it’s contract law. Bondholders have secured debt. Why would they accept any deal outside of bankruptcy court, unless it benefitted the bondholders?
Sounds like you advocate the “What’s yours is mine, and what’s mine is mine” position.
If Obama came and said I had to sell it to him for 15 centas a share, what do you think I would tell him?
I am afraid the bindholders are right on.They just won't sell out because they want a chance to get their fullest investment.And I can't blame them one bit.
Well that will be interesting in the bankruptcy court! LOL.
It is not like the bondholders own anything at all here. All they have is a claim against a bankrupt deadbeat who can't pay. They want the US treasury to pay them instead, and they want to dictate how much, too. To hell with them.
The US treasury just doesn't give a dime, the UAW demands everything there is to work again, and Fiat says they will only deal with a clean company after, not the messy one within, bankruptcy. Then the bondholders get nothing, and everyone else goes right ahead and makes the existing deal on the table without them, five minutes *after* all the claims are cancelled as unpayable by the judge.
Why is this hard to see? The US treasury is the only party willing to put in money here, so naturally it calls the shots. If JP Morgan were doing this deal in its place, that is how it would go.
They won’t get nothing. They’ll get first dibs on what’s liquidated in Chapter 7. This is Chapter 11. Gov’t wants to hand the company to the union for free. The union is ‘owed’ $20B in payments to a trust. The bondholders actually hold secured debt.
Why should the bondholders back off again?
Everybody thinks bankruptcy means the company ceases to exist. That’s not what bankruptcy is. Bankruptcy is when the company goes to the creditors.
The bondholders are the creditors. If the bondholders end up with the company, they’ll break the union, who by the way should be broken, since they put them in the mess they’re in right now. The union is a supplier, just like any other supplier. They aren’t owners, and they don’t hold secured debt.
Thats the real issue.Obama wants them gone, so thet the Unions don't have to deal with them. Its "class warfare against the wealthy." And you can guess who I am cheering for.
Because they own nothing without the treasury paying the company $8 billion.
"Oh no, see, we own the whole company". Which is worth *zero*. Without Fiat, without the UAW, with the entire supplier network screwed, with the bankers all paid nothing, it will not be "the union" that is broken. There will be *nothing*.
Then the workers, and bankers, and Fiat, and US treasury, and suppliers, can make their own new company and call it Dysler. And the bondholders can pound sand.
Or, we could pretend we can all see this, and they can have 29 cents on the dollar to shut up and go away. Or 32, to make their jackass lawyers feel important for another fifteen minutes.
If the old JP Morgan were doing this deal, these bondholders would be told by the banks they'd never borrow a dime again, or they could take 29 cents and like it.
This isn't capitalism and its isn't ownership and it isn't class anything, its just a stickup of the US treasury. There is no reason whatever to give them the time of day.
And I hope the bond holders win that fight.
There is no reason whatever for any other party to the proceeding to agree to any part of it. It offers no one else anything (the UAW gets less, just something so they don't all walk). "Why don't you all give everything to me?" is the "proposal", in substance. To call it a proposal is being charitable. They have no answer as soon as the suppliers, banks, and treasury say "on those conditions, we will not deal with the new entity, nor lend it a dime".
Their underlying problem is simple. They offer *nothing* to the new firm. Not management, not expertise, not capital, not labor, nor funding, not equipment, nothing.
If it were me I'd lower then offer to them 1 cent a day until they took it or it hits zero, and then do the deal without the old company at all.
The bond holders wnat to get in front of a bankruptcy judge, and they will. This promises to be interesting.
This is so, or else the deal would be done now. I get a kick out of the histrionics of Obama. I want to see more of that!!!!
We are getting to see Zero's true politics now, he can't keep them in the closet any longer.
Chrysler should die. No re-emergence as a UAW zombie.
There are no its. The lender is us, although Obama's administration and the Congress are acting as rogue agents -- outside of the charter we established. And the senior bondholders would get every asset, once in Bankruptcy. The US loans are -- correct me if I am wrong -- not senior.
Oooooooh Iwouldn't go so far as to say that.LOL.
I bet the hedge crowd could do a lot better job running Chrysler than the Union/government cadre.They would want it to make a profit. The Unions and "givernment" aim to make sure Chrysler never makes a profit ever again.
Not only that, they might even sell their stake to China, a move that would ensure Chryslers future success.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.