Chrysler deal lives, Rule of Law is dead
Posted by Richard on June 10, 2009
This is terrible news. The Supreme Court has turned its back on Chrysler's secured creditors:
In a victory for the Obama administration driving the restructuring of bankrupt Chrysler, the court denied a request from Indiana pension funds to delay the sale to a group led by Fiat, a union-aligned trust and the U.S. and Canadian governments.
The White House welcomed the high court's action.
…
The Supreme Court decision followed a one-day stay issued by Justice Ruth Bader Ginsburg that prevented the Chrysler/Fiat deal from closing on Monday as planned. The Fiat option was the only one pursued to save Chrysler from collapse.
The pension funds said the bankruptcy and appeals courts are moving too fast and contended that Chrysler's sale would unlawfully reward unsecured creditors ahead of secured lenders.
They also said that the plan amounted to an illegal reorganization and that the Treasury Department overstepped its legal authority by using financial bailout funds for Chrysler when Congress had intended the money for banks.
The Treasury has dedicated more than $12 billion for Chrysler and roughly $50 billion for GM as part of the government's bailout of stricken U.S. automakers.
From now on, whenever Tim Geithner and Barack Obama shout "It's a crisis! We have to act right now!" they're free to shred existing contracts, stiff secured creditors, and redistribute to their friends what's rightfully owed those creditors. So long, Rule of Law; hello, Peronism.
So tell me, are you more or less likely to invest in corporate bonds knowing that Washington can wipe you out or give you pennies on the dollar with a wave of the hand?
What about Treasuries? This administration has now demonstrated that it has no respect for the contractual obligations entered into by others — and the Supremes have decided that it's expedient not to stand in their way. Does that make you more or less confident that the government will stand behind its own debt obligations? How do you think it makes the Chinese and Europeans feel about that?
This is a very sad day. Our president is a lean, cool, charismatic version of Hugo Chavez, and he's turning this country into a banana republic. And no one dares to stand in his way.
I'm disgusted.
Rick Shultz said
Well, all I can say is that this whole thing is one of many reasons that 35 years after I met Richard, I am still a comitted anarchist.
Clarence Darrow said a couple of things that strike me as applicable one way or another. One was this: “When I was a boy, I was told that anyone could become President; now I’m beginning to believe it.” The other was:”The law does not pretend to punish everything that is dishonest. That would seriously interfere with business.”