Obama: Intervening in a bankruptcy on behalf of one particular group sets “dangerous precedent”
Posted by danishova on July 16, 2009
Jaw-dropping hypocrisy alert:
July 15 (Bloomberg) — President Barack Obama “strongly opposes” an effort in Congress to require General Motors Corp. and Chrysler LLC to restore relationships shed during bankruptcy proceedings, while stopping short of a veto threat.
The administration said today in a statement that “the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run.”
The statement also said it would set a “dangerous precedent” to “intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point.”
Here’s the full quote, from the White House:
The Administration strongly opposes the language in the bill that attempts to restore prior Chrysler and General Motors (GM) franchise agreements. The auto companies, like many in the country, face difficult economic and fiscal decisions. The Administration shares the Committee’s concern for dealers affected by Chrysler and GM bankruptcy agreements, and has taken steps to help support viable dealerships during this transition. For example, on July 1st, the Small Business Administration implemented a new program to provide guaranteed floor plan financing loans. However, the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run, and to improve the prospects for the companies’ repayment of the substantial taxpayer investments. Without the significant steps these automakers have taken to revamp their operations, the companies would have failed – imperiling every GM and Chrysler dealer in the country. Under the automakers’ new structure, the overwhelming majority of GM and Chrysler dealers will continue operating with the new companies. The decision to invest taxpayer dollars into these companies required all stakeholders to make difficult sacrifices, and it would set a dangerous precedent, potentially raising legal concerns, to intervene into a closed Judicial bankruptcy proceeding on behalf of one particular group at this point.
Granted, Barry is referring to a “closed” bankruptcy proceeding, but what about the “dangerous precedent” he set during the bankruptcy process, when he defied contract law and pushed Senior Bond Holders to the back of the line, while the U.A.W. got a sweet deal with a huge stake in GM, and distinct advantages were given to the U.A.W. in the Chrysler deal?
Obama and his czars picked winners and losers, the bond holders were referred to as “vultures” and Tom Lauria who acted on some of their behalf was called a “terrorist” by Rattner’s deputy. (Yep, that would be the same Steve Rattner who abruptly exited his White House post). Pension funds and individual retirees made deep “sacrifices” for the unions (you know, the big donors to Obama’s campaign and loyal stewards of the Democrat Party). As a result of this “precedent” investors can no longer be assured that contracts will be honored, disincentivizing future investment, with predictably disastrous results.
Under normal circumstances I too would have reservations about Congress intervening in a bankruptcy after the fact, but this one smells to high heaven. Not only did Senior Bond Holders get screwed, but there is evidence that in the process of “rationalizing the dealer network” the dealerships that were targeted for closing were chosen based on their political affiliation and donations, not on their profitability. In fact, many of the closed dealerships were profitable enterprises. Incredibly, Obama had the gall to assert that the closed dealerships were “making a sacrifice for the next generation”. Translation: Thanks for sacrificing for me, Michelle, and my kids. It’s also worth noting that since this galling speech, Obama is now echoing John McCain by asserting that “many of these jobs won’t come back”. But hey, we’re creating a green Utopia, so it’s like totally worth it.
The bottom line is that everything Obama touches has disastrous immediate and long term consequences. He is like a giant wrecking ball, destroying the economy and the Constitution. If nothing else, by initiating this challenge in Congress, I’m happy to see this issue come to the attention of a wider audience of Americans. Unfortunately, with Democrats in charge, we cannot be assured of a good outcome.