The president’s bailout of the auto industry has degenerated into blackmail, extortion, and intimidation:
If the Bush White House had engaged in anything similar to what’s being described here (actually, Hank Paulson did; the question is how much Bush knew), there would be calls for impeachment.
What attorney Tom Lauria describes is nothing short of chilling.
What follows is a rush transcription, omitting the intro and wrap-up niceties, of an interview today between WJR’s Frank Beckmann and Tom Lauria, attorney for most of (at the moment) Chrysler’s non-TARP creditors:
Beckmann: So what’s the matter with your vulture clients who are so greedy and selfish. Why won’t they go along with this?
Lauria: Well, they bought a contract that says that they get paid before anyone else does by Chrysler. And they have been told by the government who is in complete control of Chrysler, oddly enough, that despite their contractual right, they do not get paid before everyone else.
So they are standing on their rights, standing on the law, trying to defend in effect what is the Constitution of the United States, to make sure that they get what they’re entitled to for their investors.
Beckmann: Tom, let me make the argument against you in another way. We’ve heard the President say this, “I wouldn’t want to stand on their side.” Ron Gettelfinger says “Everyone else has made concessions. These people won’t; they’re greedy.” Why not take a concession that is being asked of everybody else and is being accepted by everybody else, including other hedge funds that had bought some of these bonds in Chrysler?
Lauria: Well that’s a great question, because let me tell you it’s no fun standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent, and that’s a moving target.
I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.
Beckmann: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.
In other words: Nice hedge fund you got here. Shame if something happened to it.
Now let me just tell you, to be clear, that we do not oppose the rehabilitation of Chrysler. We think it is vitally important that a company like Chrysler be protected to the extent that it can be within the framework of the law. I want to also say that we do not oppose the government backstopping or supporting the pensioneers and retirees and workers of Chrysler.
I actually think that in a troubled economic time like we’re in, that is an appropriate role for the government to perform. What we do oppose, however, is the abuse of the bankruptcy law to coerce first-lien lenders subsidize the rehabilitation of Chrysler or the backstop of the obligations to the pensioneers and retirees beyond what they will do voluntarily.
And just to be clear, these clients of mine have agreed to compromise 50% of their first-lien position to help support the rehabilitation of Chrysler — Contrary to what the President said yesterday in his new conference that “these people will not give to support the effort,” they have agreed to compromise 50% of what they’re owed to support the rehabilitation of Chrysler, despite the fact that they’re under no obligation whatsoever to do so.
There’s a great deal more, and the lawyer also stresses the point I made the other day, namely that hedge funds represent investors: “pensioneers, teachers’ credit unions, personal retiree accounts, retirement plans, college endowments”. The president is abusing his power to abrogate contracts and screw individuals and “worthy” institutions that holds Chrysler’s debt. The unions, on the other hand, are handsomely rewarded for any concessions they have made with de facto control of the company.
I can’t decide which is the more terrifying prospect: the UAW and the White House trying to run an automobile company; the president employing fascist (the word genuinely fits) techniques to extort concessions; his complete disregard for the primacy of contracts; the media’s utter deference to all of the above.
Like the community organizer that lies at his core, President Obama is not above brandishing a pitchfork of his own.