Archive for Bailout

Joe the Shakedown Artist

I don’t think I’ve read a better summation of the President’s shakedown of the moneymen (“speculators” he called them) who hold Chrysler’s debt:

The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him.

Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities. That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous.

That’s indisputable. The numbers I’ve read suggest that the investors, who hold 30% of the company, had been asked (asked my ass—told, even threatened, is closer to the mark) to take scant pennies on the dollar (they offered to “compromise 50% of their first-lien position to help support the rehabilitation of Chrysler”, says their lawyer), while the United Auto Workers, which held a 10% stake, is to be given 55% of the company in exchange for a few concessions.

But it gets even better:

Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people’s money. The President’s comments here are backwards and libelous. Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protestors soon. Hedge funds really need a community organizer.

OH! That’s going to leave a mark.

This is America. We have a free enterprise system that has worked spectacularly for us for two hundred plus years. When it fails it fixes itself. Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.

I am ready for my “personalized” tax rate now.

Who is this, Joe the Hedge Fund Manager?

Let us recall how candidate Obama spoke of hedge funds—versus how he acted:

Obama’s corporate-bashing rhetoric should, of course, come as no shock. During the campaign and continuing through his first 100 days, he has routinely attacked the “ethic of greed.” When Sen. John McCain publicized Obama’s wealth redistribution comments to Joe the Plumber, Obama snarked that McCain was “fighting for Joe The Hedge Fund Manager” and was “in cahoots with Joe the CEO.” First Lady Michelle Obama also singled out hedge fund managers for scorn, urging young people to turn away from unrewarding work on Wall Street for more fulfilling jobs in the “helping industry.”

But behind the public lashings, the Obamas were all too happy to pass the plate around the pews of the Church of “Greed.” According to the Center for Responsive Politics, hedge funds and private equity firms donated $2,992,456 to the Obama campaign in the 2008 cycle. Obama, vocal critic of the campaign finance practice known as “bundling,” accepted more than $200,000 in bundled contributions from billionaire hedge-fund manager James Torrey, more than $100,000 in bundled contributions from billionaire hedge-fund manager Paul Tudor Jones and more than $50,000 in bundled contributions from billionaire hedge-fund manager Kenneth C. Griffin, chief executive officer of Citadel Investment Group in Chicago.

No less than 100 Obama bundlers are investment CEOs and brokers: nearly two dozen work for financial giants such as Lehman Brothers, Goldman Sachs or Citigroup.

Somehow, “President” doesn’t feel like the right title for Obama. First Community Organizer is better. Or Shakedown Artist in Chief.

Jesse Jackson muttered those notorious words: “Barack… I want to cut his nuts off.” But I think Obama is the one wielding the rusty blade: he’s taken Jackson’s PUSH extortion tactics to a national scale.

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Ba-Racketeer Obama Rides Again

We’ve already reported (and had confirmed) that President Obama “negotiated” with Chrysler’s creditors the way Tony Soprano would “negotiate” with a deadbeat better: by means of a lead pipe.

But it turns out there are debts he’s willing to forgive: those to you and me.

Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation was buried within Chrysler’s bankruptcy filings last week and confirmed by the Obama administration Tuesday. The filings included a list of business assumptions from one of the company’s key financial advisors in the bankruptcy case.

“The reality now is that the face value [of the $4 billion bridge loan] will be written off in the bankruptcy process,” said the official, who added that the 8% equity stake that Treasury will be receiving as part of the company’s reorganization is meant to compensate taxpayers for the lost money.

“While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated,” said the official.

First, what value will we see for our money? Any? What will the American People get out of Chrysler, particularly when President Neophyte will be able to dictate the types of cars Chrysler can and can’t make, burying lines that make $$$ and forcing them to make cars that people, even Climahysterics, don’t want?

Second

According to the filing, the company’s financial advisor also foresees the need for an additional $1.5 billion loan from the Treasury Department by June 30, 2010.

We’re going to write off something like $8.5 billion in return for a chump stake in a chump company? I don’t know about you, but I could use the 28 bucks out of my pocket that represents—to pay for gas that has crept back up above $2 a gallon.

The president gets all Godfather on the hedge fund presidents, yet turns into Grandpa Walton when the money is ours. Somebody check the Constitution to see whom he works for. I’m not sure anymore.

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Ba-Racket Obama Revisited

How dishonest is President Obama?

Lawyers are more trustworthy, that’s how:

Business Insider reports that more than one Chrysler senior creditor has corroborated Thomas Lauria’s allegation that the Obama administration threatened them with public attacks if they didn’t surrender their contractual rights. One of their sources says that the Obama team comprises some of the worst “ends justify the means” people he’s ever encountered:

Creditors to Chrysler describe negotiations with the company and the Obama administration as “a farce,” saying the administration was bent on forcing their hands using hardball tactics and threats.

Conversations with administration officials left them expecting that they would be politically targeted, two participants in the negotiations said. …

The sources, who represent creditors to Chrysler, say were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person said 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.

I don’t think Obama is crazy; I think his ideology is mad. When we covered this the other day, I expected the later details to soften the edges of the story. Turns out, they’re sharper than ever.

Get this: he growls like a Doberman at American business executives, yet genuflects before Saudi royalty like a submissive cur.

I do not like him Sam-I-am.

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The Blunder Leading the Blunder

Somebody sent this to me a while ago, but I forgot to post it.

TARP, in pictures (abbreviated from the original):

1.jpg

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That’s a five-thousand word essay in five pictures.

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Ba-Racket Obama

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.

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Tune Up

Further to my automobile post below, I liked this comment from the Corner:

These are troubled financial times, but what really makes Chrysler and GM different from those automakers in the U.S. market that are not facing bankruptcy? Answer: The United Autoworkers Union.

In his announcement today that Chrysler is entering bankruptcy to resolve its debts, nothing President Obama said changed Chrysler’s fundamental labor disadvantage vs. its non-union U.S. competitors. Indeed, the UAW will now own 55 percent of Chrysler in a debt-for-equity exchange that finances the union’s health-care trust fund.

Obama mouthed the fiction that Chrysler’s troubles stem from “failing to make the fuel-efficient cars like its foreign competitors.” In fact, Chrysler’s uncompetitive labor costs long ago made it impossible for the company to manufacture anything but large SUVs and minivans at a profit.

Chrysler will also be one-tenth owned by the feds, meaning that a private, for-profit company will be majority-held by two entities whose priorities are not making cars at a profit but saving union jobs and expanding the web of regulation. Former American Motors president Gerald Meyers told WJR-Radio after Obama’s announcement that union/government ownership of an auto company amounted to “a grand social experiment.” Would it work? “No,” he answered.

Those of us who think President Obama is a pompous horse’s ass feel that way not because he’s doing things differently from the way we’d like them done, but because he’s doing the wrong things. Repeatedly, and on almost every occasion.

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Last National Bank

What a great story:

Calling itself and other minority-owned banks a “rare beacon of hope” in their neighborhoods, OneUnited Bank of Boston last fall made an emotional plea to the US Treasury for help with millions of dollars in soured investments.

Without assistance, bank officials said, OneUnited and other institutions might fail. The money did not come right away. But with the aid of US Representatives Barney Frank and Maxine Waters, OneUnited secured meetings with the Treasury, and by December received $12 million from the government’s bank bailout fund.

It was the latest sign that the nation’s largest black bank still holds sway with powerful politicians, despite a shrinking profile in Boston and financial troubles that brought a sharp rebuke by regulators. The bank has retreated from traditional urban lending, and in recent years has made few home loans in its Boston community, parts of which have been ravaged by subprime mortgages.

Among the handful of home loans OneUnited has made in the past few years were several to wealthy businessmen for upscale properties in the South End, Brookline, and even on Martha’s Vineyard.

Lending to Kennedys, Cabots, and Lodges—what a great business model! Why should a black-owned bank in Roxbury or Dorchester have to lend to freeloaders and deadbeats in, you know, Roxbury and Dorchester? If doing so in the past put them $12 million in the hole—from which they climbed out by stepping on piles of our money—maybe they shouldn’t do that anymore.

Just because they’re black-owned? Does being black make you unable to follow sound business practices? Isn’t that a little bit racist?

Listen to the bank’s chief executive, no fool he: “If we had participated in inner-city housing lending, . . . we would have been out of business.”

You can say that again.

Except they didn’t say that before, when they were shnorring for the bailout:

“Unlike majority banks, which principally focus on profit, the express mission of minority banks is to promote these underbanked, underprivileged communities,” the bank’s chief counsel, Robert Cooper, wrote.

For which all the underbanked of Brookline and the underprivileged of Martha’s Vineyard give much thanks.

There’s a lot more—for which we have to give credit to the Glob—but as one commenter observed:

Amazing. No mention that Maxine Water’s husband served on this banks board and they still own stock in the bank they came to the aid of. The state prosecutors need to examine this bank and it’s political friends.

Which state? Massachusetts? Are you drunk? What pawt of Bawney Fwank don’t you get?

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Minding the Store

When we Bloodthirstani criticize President Obama, we can be (and are!) dismissed as knuckle-dragging troglodytes. Fair enough—except for Aunt Agatha, who would never drag her knuckles, as doing so might chip a nail.

But what about this fine example of homo gyno erectus?

warren

Until last year, Harvard Law School professor Elizabeth Warren was perhaps best known for her writing on bankruptcy and consumer finance. But last fall, she was appointed chair of a newly created Congressional Oversight Panel, which is charged with keeping tabs on the $700 billion bailout of the financial sector – an effort formally known as the Troubled Assets Relief Program.

Q: You’ve been quite critical of the Treasury. What troubles you most about what you’re getting and what you’re not getting?

A: There’s no discussion of the overall policy. Instead, there are specific programs that are announced, and from that, it’s necessary to reason backwards to figure out what the goal must have been. It’s like a “Jeopardy!” game. If this is the answer, what was the question? It’s frustrating because without a clearly articulated goal and identified metrics to determine whether the goal is being accomplished, it’s almost impossible to tell if a program is successful.

Q: Do you have a clear sense of what the overall TARP plan at this point is supposed to do? Are you capable of summarizing what it’s supposed to be doing?

A: No. And neither is Treasury. Treasury has given us multiple contradictory explanations for what it’s trying to accomplish.

There’s a major problem and a minor problem. The minor problem is documentation. I’ve spent four weeks now looking for someone who can give me the details of the stress test so that we can do an independent evaluation of whether the stress test is any good.

We get: “someone will call [you] right back.” Only the call doesn’t come.

The major problem is that Treasury has not articulated its goals. And without that, we can’t have a robust debate about whether they’re headed in the right direction; instead, we’re stuck with this more technical argument about the implementation of the [Term Asset-Backed Securities Loan Facility] or the details of the Capital Acquisition Program. And that misses the central question of, should we be subsidizing failing banks or liquidating them? When we acquire capital, should we exercise more control over the institutions that take the money or less control? Those are the central policy issues that the American public has a right to participate in.

Can I get an amen?!

Who do you trust—someone like Elizabeth Warren, or Lonesome Tim Geithner, who, as far as I know is still holed up in Treasury like some Howard Hughes recluse?

lol

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Plummeting to Prosperity

Interesting video puts the last six months of spending commitments into perspective:

I won’t give away the ending, but suffice it to say that we’re spending like the United States of Leona Helmsley.

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Beep-Beep-Beep!!

The Obama Administration is backing up!

After spending the last few weeks rabble-rousing over compensation at companies that receive TARP funds, the Obama administration has quietly reversed course. Now that Barack Obama needs partners in the private sector to unload toxic assets, the White House has begun creating work-arounds for compensation caps passed by Congress in the heat of AIG retention bonus outrage:

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Oh, for pete’s sake. Do you want to demonize rich executives or don’t you? Why are AIG execs cowering under their beds, while Rick Wagoner lands softly on his $23 million golden parachute?

And execs in the future will actually be able to give Congress the finger?

Which I approve of—don’t get me wrong. But why the change of face heart?

The borderline illegal change of heart?

Legal experts said the Treasury’s plan to bypass the restrictions may be unlawful.

“They are basically trying to launder the money to avoid complying with the plain language of the law,” said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. “They are trying to create a loophole to ignore Congress, and I think the courts will think that it’s ridiculous.”

It will be a toss-up to see which effort the court finds more ridiculous — the bill of attainder passed by Congress with Barack Obama’s explicit endorsement, or Barack Obama’s hypocritical efforts to undermine the law he demanded in the first place. It’s Keystone Kops at Treasury, Capitol Hill, and the West Wing.

Yeah, we’re getting that impression, too.

But wasn’t this guy supposed to be intelligent, articulate, and clean? One out of three ain’t too good.

The only other conclusion is that his bi-polar behavior is intentional. Whip up a populist frenzy, and then move on. Let ACORN and similar nuts carry on the battle, while the administration steals away unnoticed. It’s not like anyone’s going to call him on it.

I can’t figure him out.

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In for a Penny…

In for another $167,000,000,000

U.S. congressional budget analysts have raised their estimate of the net cost to taxpayers for the government’s financial rescue program to $356 billion, an increase of $167 billion from earlier estimates.

The Congressional Budget Office had originally projected the $700 billion Troubled Asset Relief Program would cost taxpayers $189 billion.

The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO’s March projection of a $1.8 trillion deficit for fiscal 2009, which ends September 30.

The TARP cost projection was raised due to changes in financial market conditions, new transactions and a shift in expected timing of payments, the CBO said.

The Treasury Department announced plans to use some of the money to help avoid home foreclosures and made new deals with Bank of America and American International Group. Those programs involved higher subsidy rates than previously estimated, the report said.

What’s that, about a thousand dollars additional on every taxpayer’s bill? On a rounding error?

I just wish I was as wealthy as these geniuses thought I was. I don’t have it.

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Dude, Where’s My Pitchfork?

Don’t let this get out, lest the mob attack, but look who’s getting all AIG-y on us:

Fannie Mae and Freddie Mac, the two troubled companies at the heart of the nation’s mortgage market, are set to pay their employees “retention bonuses” totaling $210 million, despite calls from lawmakers to cancel the payments.

The bonuses, which were made public on Friday, were defended by the companies’ federal regulator, James B. Lockhart, who said he intended to let them proceed.

In a letter sent last week to Senator Charles E. Grassley, an Iowa Republican, Mr. Lockhart disclosed that 7,600 Fannie and Freddie workers were scheduled to receive payouts aimed at retaining those “employees most critical to keep and difficult to replace.” Under the plan, 213 employees will receive retention bonuses worth more than $100,000 this year, and one Freddie Mac executive will receive $1.3 million.

Those figures drew sharp rebukes from Mr. Grassley and other lawmakers, who noted that Fannie and Freddie had received pledges of $400 billion from taxpayers to offset huge losses since they were seized by the government in September. Similar bonuses paid by the American International Group, which was also bailed out by taxpayers, incited fiery attacks from the White House and legislators when they were revealed last month.

“It’s hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year,” Mr. Grassley said in a statement. “It’s an insult that the bonuses were made with an infusion of cash from taxpayers.”

President Obama was exercised enough by this outrage to make this statement:

crickets

And Barney Frank, who never met a bonus against which he could not fulminate, thundered:

Rep. Barney Frank (D-Mass.) expressed concerns that Fannie Mae and Freddie Mac, which received over $50 billion in taxpayer dollars, would be paying bonuses. Frank called for bonuses to be withheld.

Speak up, I say, speak up son! I can’t hear you!

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