I don't play that game. Any link I'd provide you could claim was from a winger web site, and even if it was from a left of center site, you'd claim the author was the winger. The truth of the argument isn't determined by the political ideology of the person making it. If I decided to provide additional links, I won't limit myself to ones that you approve of.
If you want links on the subject look for Joe's posts of Economist articles.
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But this is no ordinary bankruptcy. JPMorgan Chase and other large banks involved in the negotiations are, to greater and lesser degrees, beholden to Washington. Many have received billions of taxpayer dollars, as well as other generous subsidies. For the banks, defying the administration was never a serious option, according to people close to the talks with lenders, who asked not to be identified because they had signed confidentiality agreements.
The other creditors, who sought to distinguish themselves from those who have received bailout money, believed they had a stronger hand. Many of them bought Chrysler debt for about 30 cents on the dollar, long after it became clear that the company was in trouble. Most of this debt is secured by Chrysler assets — factories, equipment, real estate and the like. The thinking was that in the worst case, these assets could be sold at a profit if Chrysler were liquidated.
The dissident creditors said they had a fiduciary responsibility to seek the best possible returns for their own investors — which, the group said, include teachers’ unions, pension funds and endowments.
“The government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades,” the group said in a statement Thursday. The creditors suggested banks that had received bailout money were being strong-armed by the administration, a view some of the bankers privately said they shared.
nytimes.com
The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person 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.
..... These allegations add to the picture of an administration willing to use intimidation to win over support for its Chrysler plans--and then categorically deny it.
Clifford S. Asness, who in a public letter at the Business Insider, rips the administration's tactics, and expresses an understanding that "one by one the managers and banks are said to be caving to the President's wishes out of justifiable fear."
online.wsj.com
Lawyers point to numerous other departures from normal bankruptcy court practice. Timelines have been squeezed, with unusually short notice of hearings.
Creditors have had little if any input in decisions on how assets should be allocated between the “new” and “old” companies.
ft.com
Chastened, and under intense pressure from the White House, the investment firm run by Mr. Weinberg and Mr. Perella, Perella Weinberg Partners, abruptly reversed course.
...
OppenheimerFunds, in a statement, said: “Our holdings in secured Chrysler debt are entitled to priority in long-established U.S. bankruptcy law, and we are obligated to our fund shareholders to support agreements that respect these laws.”
But now that Chrysler has tipped into bankruptcy, some industry executives worry the administration will try to turn this episode to its political advantage. Washington, these people contend, needed some political cover for the mess in Detroit — and Wall Street provided a handy scapegoat. A move is already afoot to tighten oversight of hedge funds and end certain tax benefits for private investments funds. The Chrysler bankruptcy, and Wall Street’s role in it, will make resisting those efforts more difficult.
nytimes.com
The bondholders made a good point. They are secured creditors, and in our bankruptcy law secured creditors get paid off in full before unsecured creditors get anything. That’s a sound legal principle: why would secured creditors lend anyone anything unless they can get their security back if the loan isn’t paid off? In this case, the small bondholders were willing to settle for only 60% of what they were owed. But, they complain, the government wouldn’t negotiate directly with them, but only through JPMorganChase, which (unwillingly) took TARP money on October 13 and thus is under pressure to do what the government wants.
Translation into politispeak: The government squeezed the small bondholders too hard in order to protect the United Auto Workers, which of course has over the years been a bounteous source of money (and manpower) for the Democratic party. The government can muscle the big banks, but it can’t (at least not yet) muscle creditors whom it hasn’t forced to take its money.
washingtonexaminer.com
...Four banks JP Morgan Chase, Citigroup, Morgan Stanley and Goldman Sachs (all TARP beholden) hold somewhere around 70% of Chrysler's debt. JP Morgan, with something like $2.5 billion of it, was playing the lead in government negotiations and seemed to be playing it pretty tough. But as the big banks started to cave something interesting happened, according to a hedge fund manager and participant in the meetings I spoke with:
The criteria for who sat down at the Chrysler negotiating table were never set out as "TARP recipients here, non-TARP out of the room"- but the distinction was crystal clear to the people outside of the room who were blamed for the collapse in negotiations and the TARP recipients in the room who wouldn't dare cross the government when there are pay limitations literally on the negotiating table in the next room at the Treasury.
Smaller dissenters don't just have the government to worry about, and the government has taken pains to make the fact that it is happy to be dangerous to the interests of holdouts when it wants to be, but many holdouts are also are likely to have important relationships with one or more of JP Morgan Chase, Citigroup, Morgan Stanley and Goldman Sachs. Now you have to risk offending not just the government, but its wards as well.
Anyone claiming that the 363 sale proposal that emerged out of this process meets the requirements of that section has an agenda that does not include compliance with the bankruptcy code. Specifically:
The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if—
1. applicable nonbankruptcy law permits sale of such property free and clear of such interest;
2. such entity consents;
3. such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;
4. such interest is in bona fide dispute; or
5. such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.
(Emphasis added).1
I would be rather surprised to find that the requirement of 363(f)(3) is met here, or that the process followed in the interim comes anywhere close to meeting the requirements of Chapter 11 generally. But this sort of thing hasn't stopped, for example, Tim Geithner from claiming that the Treasury is legally entitled to set conditions for TARP repayment (it isn't), or for Obama to claim that the government had the power to claw back bonuses (it didn't). There is, in fact, quite a lot of firing before sighting in going on in this administration...
finemrespice.com |
