Capitalism, gangster-style

Have you followed the Chrysler bankruptcy issue at all?  In a nutshell, the White House has come up with a reorganization for Chrysler that gives the UAW and the federal government a far more favorable outcome than a number of bond holders.  The bond holders have the right to accept or reject the deal.  They felt that the pennies on the dollar being offered were far less than they’d likely get in a bankruptcy court managed reorganization, so they turned down the deal, performing their fiduciary duty to the private investors who are their clients.

In return, the White House threatened to use “the full force of the White House press corps to disparage and malign the companies who refused, and Obama himself has publicly repudiated them for not “agreeing to share the burden”.

Keep in mind, these are not TARP recipients.  These are private companies who made good faith investments in Chrysler and would be stealing from their clients if they agreed to a deal they consider not in their clients’ best interests.  Some of the hedge fund managers and lawyers who are making the accusations are prominent Democratic donors.  One of them risked retribution to write about it here:

http://www.businessinsider.com/henry-blodget-this-hedge-fund-managers-not-afraid-of-big-bad-obama-2009-5

There’s also more background on it here from my favorite blog:

http://www.powerlineblog.com/archives/2009/05/023497.php

Some of those who like Obama presumably also believe in capitalism and the rule of law.  This Chrysler case, even more so than some of the shenanigans with the government refusing to allow banks to pay back their TARP loans — is an affront to the rule of law.

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