This is an issue I have wanted to write about but I have been doing my research on. Something did not smell right when Obama said the following words last week regarding the Chrysler bankruptcy:
“But while many stakeholders made sacrifices, some did not. In particular, a group of investment firms and hedge funds that hoped to hold out for a taxpayer-funded bailout. I don't stand with them. I stand with Chrysler's employees, management and suppliers. I don't with stand with those who held out when everybody else made sacrifices.”
Ok, one needs to understand exactly what about is saying and doing here. Obama was asking senior creditors, who are supposed to be the 1st in line to be paid, to only take 29 cents on the dollar. The senior creditors rightfully balked at this proposal. If you lent someone money under the condition that you were the 1st person to be paid back, how would you feel if you just got screwed like this? The answer: not too good. Obama said that everyone made sacrifices in this planned bankruptcy, and this is true, but the sacrifices are not equal. These senior creditors were willing to sacrifice 50 cents on the dollar, when they deserved 100 cents on the dollar. Yet Obama is trying to demonize them as evil hedge funds. Obama is trying to use the bully pulpit in order to shove law out the window.
Doing this would be bad enough, but sadly there is a political bent here too. What Obama did was raise a junior creditor up in the process, the unions, and diverted money to them that would go to the senior creditors in a normal circumstance. The UAW is a huge supporter of Barack Obama, and now it is paying off. It is paying off and at the same time Obama is screwing up the bankruptcy process by changing where the money goes. Anyone who has read John Locke knows the importance of contractual law and Obama seems to have no regard for it. A say day indeed.
