Posted on 06/20/2009 4:06:08 PM PDT by reaganaut1
Several weeks ago President Obama pilloried holders of Chrysler debt who refused to take a deal for less than they had expected as secured creditors of the company, famously dismissing them as "a small group of speculators." Bloomberg reported that he also questioned their motives, saying that, "A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout."
Among other things, Obama tried to cast the conflict as a moral issue, in effect suggesting that bondholders were greedy and threatening the jobs of hardworking Americans with unfair demands and a lack of interest in burden-sharing. "They were hoping that everybody else would make sacrifices and they would have to make none," he said.
Whether he meant to or not, by focusing on the background of those then holding Chrysler bonds and also how little they paid for them, the president may have won the PR battle, but otherwise dealt a blow to the rule of law. How? By dismissing the importance of established bankruptcy law, and in effect tossing out principles of both the Fifth and Fourteenth Amendments of the Constitution that, among other things, stipulate "No person shall be…deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation" in the Fifth, and that we're all entitled to "equal protection of the laws" in the Fourteenth.
Unintended Consequences
This episode drips with irony. One reason is simply that those bedrock constitutional principles are the last refuge for protection of the proverbial "little guy" the president was apparently trying to champion. Another is that it came so closely on the heels of the "moral hazard" disputes around Wall Street's financial rescues and bailouts.
(Excerpt) Read more at news.morningstar.com ...
I don't agree with the title -- shafting the taxpayer and creditors to pay off union contributors is not "moral".
He could not be dog dung on big Al shoes!
Next time someone is in the market to buy some bonds - and someone is trying to sell, how much higher will the rate need to be to compensate the now increased risk of loss????
Zero is a toy bad guy!
If that person who is in the market is acting as a fiduciary they better not buy any bonds ! The beneficiaries would have an excellent case against them if the Obama regime again stole their secured property.
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