During the Chrysler bankruptcy, Obama violated the Fifth Amendment and more than 150 years of bankruptcy law by illegally treating secured creditors worse than unsecured creditors. Some of these secured creditors were retired teachers and police officers from Indiana.
Richard A. Epstein, a law professor at New York University School of Law, wrote, “Upsetting this fixed hierarchy among creditors is just an illegal taking of property from one group of creditors for the benefit of another, which should be struck down on both statutory and constitutional grounds.”
Todd Zywicki, Professor of Law at George Mason University School of Law, wrote that Obama’s treatment of secured creditors was “dangerous to the rule of law.”
The Economist wrote that Obama’s actions could “establish a terrible precedent. Bankruptcy exists to sort legal claims on assets. If it becomes a tool of social policy, who will then lend to struggling firms in which the government has a political interest?”
Francis Cianfrocca, the CEO of Bayshore Networks, wrote that Obama’s actions were “an astonishingly reckless abrogation of contract law that will introduce a new level of uncertainty into business transactions at all levels, and make wealth generation more difficult going forward… An extraordinary uncertainty has been created when the most powerful man in the world can rewrite contracts and choose winners and losers in private negotiations as he sees fit. Since this is an unquantifiable uncertainty, and not a quantifiable risk, its effect on business and investor confidence will be large and unpredictable. As in the 1930s, a time when government also cavalierly rewrote private contracts, the prudent approach for business will be to invest minimally and wait for another administration.” |
