I feel like I have seen this bad gangster movie before.
In the opening scene, a naive investor buys some bonds, explaining to his staff that they are a sound investment secured by hard assets. Even if the company goes under, the investor explains, bond investors stand to get about 80 percent of their money back.
The next day, a government official calls and offers to buy up the bonds at 33 cents on the dollar, while giving controlling interest in the company to the labor unions. The investor refuses. That night, a man shows up at his home.
“We’re not saying anything bad is going to happen to you,” the tough says, “but the big boss is going to be very disappointed in you if you don’t take the deal. By the way, how’s your little girl? Is she still going to school down on Federal Street?” The investor caves.
The evolution of the Chrysler LLC bankruptcy seemed almost as bad. The Obama administration brokered a deal that gave labor unions a 55 percent equity stake in Chrysler, putting their interests ahead of the secured interests of bondholders.
Goldman Sachs Foreshadowed UAW’s Chrysler Coup: Kevin Hassett
More from Neal:
What’s worse, the UAW only held 10% of the bonds. Yet they got 55% of the equity. No judge, whether the agreement was signed or otherwise implied, would suggest something suspicious was going on.
businesses don’t make decisions this bad.
The focus of the libs is to “take care” of their union workers. What about the investors? They had families too. And there were far more of the them then there are workers.
The more I see of the Obama administration, the more I see the workings of the Chicago Mob...
speaking of which, do we have a "dead pool" running on Tom Lauria? Anybody want to bet that he doesn't have a fatal accident in the near future?