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Chrysler’s Creditors Cave

Last Friday, the small group of Chrysler’s secured creditors, who had thus far refused to buckle under to the pressure, decided to throw in the towel and withdraw their legal protest to the Obama administration’s plan to resuscitate the failed auto company.  In a move more symbolic than meaningful, the group has decided that although it will not support the President’s plan, it won’t raise any further legal objections.

Thomas Luria, lead counsel for the “dissident” creditors, put it this way:

Being such a small group trying to fight the force of the government made [the funds] very uncomfortable.  In the end, they just concluded that the political cost to their institutions was too high to bear.

The group became “small” months ago, and, it should come as no surprise why it did.

The White House’s success at dividing and conquering the creditors began even before the April 30 bankruptcy filing, when it persuaded four large banks acting as Chrysler’s top lenders to accept the deal. The White House used as a cudgel the more than $100 billion in bailout funding given to the banks since last fall, including JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley.

So, in the end, Chicago style political muscle trumps both fairness and the law.

Going forward then, Chrysler will be sold to Fiat, although, given the circumstances, “sold” is a term only this administration could use with a straight face.  In reality, Fiat will be given up to a 35% interest in Chrysler in exchange for Fiat’s “automotive expertise”.  (That, too, is hard to say with a straight face.)  And, the UAW will own 55% of the new company.  The problem, of course, is when this new Chrysler emerges from bankruptcy it will find the same world as existed before bankruptcy.  Labor contracts will still make Chrysler vehicles uncompetitive with foreign manufacturers, folks that didn’t like Chrysler products before still won’t like them, and the plan to build “little green” cars will still be met with the same public disdain as it always has.

So, as taxpayers, brace yourself for a very long “ride” of government subsidy after government subsidy until the majority of some future Congress puts a stop to the madness.

Lawyer for Chrysler bond holders backs off … sort of.

Judge for yourself. This is from Neil Cavuto’s interview last night with Tom Lauria, lawyer for some of the bond holders who decided to reject Obama’s deal offering them 29 cents on the dollar for their debt. The debt holders wanted 50 cents.

Obama called them greedy and falsely claimed they were not willing to sacrifice.  If only it had stopped here.

Lauria two days ago told a Detroit radio station that his people were being threatened with ruin by Mainstream Media if he did not capitulate. Death threats followed from the “common folk”. Last night, Lauria backed off … as I said sort of. Cavuto reran the interview a few minutes ago.

httpv://www.youtube.com/watch?v=MrojkEtEsLU

He’s being careful. But Hot Air is reporting that Lauria’s allegations are being corroborated by others.

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.

Lauria responded to the death threats as well.

httpv://www.youtube.com/watch?v=JPgBCxrcNec

I am not sure his no comment constitute a denial. Sounds more lawyerly to me. And its hard not to give what he said initially some credence when the President sounds like this.

httpv://www.youtube.com/watch?v=bBQo8BbNcqU

Decide for yourself, as for me, based on the body of evidence … or course they put the arm on the bond holders. It’s how they operate behind closed doors. Still waiting for the lefties who hated Bush’s stubbornness to jump on this one.