The Smoke Break

You want some brie with that whine?

Remind Me, Please, Who’s Running The Car Companies?

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The Obama administration broke laws when it interferred with Chrysler’s bankruptcy, and Obama’s “car czar” helped put together operational plans that promptly slammed the doors shut on 789 Chrysler dealerships.  You know, those places that are in (private) business to help the car companies sell their products?  The (private) businesses that make the car companies money?

Now the House has approved an amendment to the House Financial Services and General Government appropriations bill that blocks federal money for both Chrysler’s and GM’s reorganizations if they shut down dealerships.  There is similar, standalone legislation pending in the House as well (H.R.2796) that has pulled in 242 House sponsors in just a matter of weeks (including House Majority Leader Steny Hoyer (D-MD), who argued during Thursday’s floor debate that this was a way for dealers who had been left out of bankruptcy decisions to be heard.)

The Senate is taking a similar tack, with a bill proposed by Senator Chuck Grassley (R-IA) coming out of the gate with significant support from 25 co-sponsors (S.1304), including 11 Republicans and 14 Democrats.  It has been sent to the Judiciary Committee, but Committee chairman, Senator Patrick Leahy (D-Vt.), has yet to schedule a hearing and Senate Majority Leader Harry Reid (D-NV) said this week he isn’t inclined to allow a vote on any measure forcing the dealerships to stay open.

“We will not give billions of dollars to GM and Chrysler until they come to terms with the hundreds of thousands of people out of work,” Representative Steven LaTourette (R-Ohio) said during [House] floor debate on the bill.

“The decision to invest taxpayer dollars into these companies required all stakeholders to make difficult sacrifices, and it would set a dangerous precedent, potentially raising legal concerns, to intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point,” the White House Office of Management and Budget said Wednesday.Perhaps the White House should have thought of these things before they made their decision to interfere with the private sector and “not run” the car companies (into the ground) in the first place?

The Day America Died

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No pun intended, but I used to think the day Barack Obama was elected President of the United States would prove to be one of the darkest days in American history.  Today it has come true for, truly, America has descended to a state of lawlessness.  The lives given during the American Revolution and the very best efforts of the most brilliant minds in the history of mankind to create what was once the most powerful nation in the world appear to have all been in vain. 

Today the United States Supreme Court refused to even consider the appeal made by Chrysler bondholders to block the sale of Chrysler to Fiat, an appeal made on the grounds the terms of the sale are unlawful.

The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.

“The applicants have not carried that burden,” the court said.

I have watched this whole matter closely and I read the appeal sent to the Supreme Court.  The questions it raises about the legality of the actions of the United States government, of the Obama administration forcing all parties into a deal that favors junior and unsecured interests over what American law has always considered first-in-line investors during a bankruptcy proceeding, are serious allegations and by refusing to even consider them, the Supreme Court has now given the Obama administration the green light to run roughshod and at will over any and every private sector entity it so chooses to usurp for its own nefarious purposes.

If you were not frightened before, you should be very frightened now.  Personally, not only am I afraid, I am heartsick.  The housecleaning of mid-term elections in 2010 cannot come soon enough.  Somehow, those who still believe in the American dream must find a way to hold fast until real brakes can be put on the fascists who have taken over Washington.

In the meantime, it occurs to me that no matter how much of OUR money the government intends to spend to induce us to buy vehicles from either version of Government Motors (“cash for clunkers“), the best way to show disapproval for this latest Chicago mafia-style move is to buy our next vehicle from Ford.  And in every other area of our lives, to vote with our dollars in support of private businesses that are run by real grownups, not children who go crying home to daddy to bail them out when they screw up.

Chrysler Bond Holders Go To Supreme Court

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I personally find it utterly unconscionable that the law of this land has become so subverted by the Obama administration that Chrysler bond holders have now been forced into an emergency filing with the U.S. Supreme Court:

“…a stay of the Sale Orders pending final resolution of the Indiana Pensioners’ forthcoming petition for writ of certiorari—on as expedited a schedule as the Court finds necessary—is essential to preserve the Court’s jurisdiction. Without a stay, the section 363 sale will close as soon as Monday, June 8 at 4:00 p.m., which is when the present stay issued by the Second Circuit will be lifted. Stay App. 74a (Second Circuit Mandate). Under section 363(m) of the Bankruptcy Code (11 U.S.C. § 363(m)), closing the sale will essentially moot the case.

If that happens, a number of consequences will follow:

(1) The United States Department of the Treasury (“Treasury”), purporting to utilize powers conferred upon it by the Troubled Asset Relief Program (“TARP”) established under the Emergency Economic Stabilization Act of 2008, 12 U.S.C. 5201 (“EESA”), will have been permitted to structure and finance the reorganization of Chrysler without any judicial review of its authority to do so (the Bankruptcy Court incorrectly disposed of the issues by deciding that Appellants lacked standing);

(2) Chrysler will have been permitted to reorganize under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. 101 et seq. pursuant to a transaction that was structured and financed by Treasury, without having been required to comply with the procedural and substantive requirements of the Bankruptcy Code for doing so; and

(3) The secured claims of Chrysler’s first lien lenders (including the Indiana Pensioners) and any unsecured deficiency claims they may have if their collateral properly valued is in fact worth less than the amount they are owed, will have received materially less favorable treatment than most of Chrysler’s general unsecured creditors.

As such, absent a stay, the Court will be deprived of the opportunity to decide critical, nationally significant legal issues relating to management of the economy by the United States Government.”

At issue is the structure of Chrysler’s bankruptcy in which bondholders – by law the most secured creditors – have deliberately been given short shrift by the administration in favor of those who have unsecured interests in the company.  The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund stand to lose millions of dollars while the U.S. and Canadian governments and the UAW cut blithely to the front of the line and take ownership stakes in a sale of Chrysler to Fiat.

The lower courts have upheld this bizarre and unprecedented bankruptcy construct; as recently as Friday the federal appeals court in New York gave the bondholder shaft its own seal of approval.  Interestingly, and somewhat telling in these days of Pater Obama, this government-beholden court gave bondholders until Monday afternoon to persuade the Supreme Court to intervene.  Unwilling to put on its big boy panties and stand up to the Obama administration by upholding the laws that give those who take the most risk in providing funding to a business the first rights of payback during a bankruptcy, it is quite evident that the New York federal appeals court is pawning off its job.

As part of her job, Supreme Court Justice Ruth Bader Ginsburg will receive the emergency filing today.  I see this as a test; a big test.  For it is the job of the Supreme Court to rule on law, and do so blindly.  There can be no “empathy” nor any partiality to political affiliations, all of which seem to be part and parcel of this Obamastein’s monster of governmental abuse of powers. 

In Bush v. Gore, 531 U.S. 98 (2000), Justice Ginsburg concurred with the dissenting Supreme Court opinion that:

What must underlie petitioners’ entire federal assault on the Florida election procedures is an unstated lack of confidence in the impartiality and capacity of the state judges who would make the critical decisions if the vote count were to proceed. Otherwise, their position is wholly without merit. The endorsement of that position by the majority of this Court can only lend credence to the most cynical appraisal of the work of judges throughout the land. It is confidence in the men and women who administer the judicial system that is the true backbone of the rule of law. Time will one day heal the wound to that confidence that will be inflicted by to day’s decision. One thing, however, is certain. Although we may never know with complete certainty the identity of the winner of this year’s Presidential election, the identity of the loser is perfectly clear. It is the Nation’s confidence in the judge as an impartial guardian of the rule of law.

I find it very troubling that we must now sit and wonder if the confidence in America’s judiciary will continue to remain so shaken.

 

 

One Guy Gets It

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Indiana State Treasurer Richard Mourdock has quite rightly decided that an investment in anything run by the Obama adminstration isn’t worth the paper it’s printed on.  In an article at WIBC today, it’s been reported that the state’s fund managers have been told that bonds issued by banks and automakers taking federal bailout money are no longer to be considered as an investment vehicle for the state.

In the real world, when a company goes into bankruptcy it is the bond holders who are normally paid first.  That is part and parcel of buying bonds, and why they are considered a very low-risk investment.  But the Obama-driven Chrysler bankruptcy cut that payment down to 29 cents on the dollar.

Mourdock says the Obama Administration’s handling of Chrysler’s debt wiped out $896,000 in value from the state’s investment of the proceeds from the 2006 lease of the Indiana Toll Road, and $147,400 from the Indiana State Police Pension Fund.  Mourdock oversees both portfolios.

Mourdock says the Teachers Retirement Fund, which is administered separately, lost $4.6 million.

It’s only common sense to not throw good money after bad. 

Too bad Washington doesn’t get it.  While the bankruptcy judge has denied the motion filed by the Indiana investors to postpone the sale of Chrysler because it gives preferential treatment to other stakeholders instead of properly addressing the needs of its secured lenders, the government is going to lend Chrysler $600 million to cover potential losses incurred by GMAC Financial Services related to Chrysler loans and $260 million to replace funds transferred to its Canadian operations.

And lest it go unnoticed, it’s also being reported that the government is getting ready to give GMAC $7.5 billion (though GMAC still needs some $11.5 billion in capital reserves, according to the government’s stress tests), and by exercising options on its preferred stock, will become a majority shareholder with voting rights.  Effectively creating their own bank holding company.  Designed, of course, to lend people money for cars no one is going to want to buy.

When Life Gives You Lemons…

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… pour yourself a shot of tequila and suck it up, buddy.

At least that’s the word on the street these days when it comes to buying a defective vehicle from Chrysler.  The L.A. Times reports that settlement checks issued under states’ “lemon laws” are bouncing like Nancy Pelosi during an Obama speech and complaints are being given as much attention as were the nationwide Tea Parties on April 15th.

Chryler’s Chapter 11 filing means that any settlement incurred before April 30th must must now be approved by the bankruptcy judge, but Chrysler has stated it has no plans of its own to ask the judge to approve any of them.  So just like everyone else holding unsecured Chyrsler debt, if you’ve ended up buying a defective Chrylser vehicle, well, in plain English you’re S.O.L.

And despite President Obama’s bold claims that the government will honor Chrysler warranties and such, according to consumer advocacy groups, the automotive task force has more important matters to handle.

Remind me, please.  Who thought having an uncle by the name of Sam in the car business would be a good thing?

Pass the Cuervo.

Fare Thee Well, Chrylser

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I suppose it’s par for the course.  The company that was first overhauled by Walter P. Chrysler in 1925 is now undergoing a metamorphasis the likes of which no American company has ever seen.  Forced onto life support by President Obama, it will now be owned jointly by the United States government, Canada, Fiat, and the UAW, while GMAC will handle its financing to customers.  Chrysler stockholders and its major debt holders, who aren’t beholden to the government’s TARP, have been handed the very short and pointed end of the stick, while the rest of America will join them in pouring more good money after bad.  Though with all of Chrysler’s auto manufacturing being idled as part of this government takover…errrr…”bankruptcy restructuring”, I can’t imagine how the government thinks Americans involved in the auto industry won’t be negatively impacted to the point their contributions in the form of taxes becomes a moot point?

With its long and storied history, the company is far more deserving of a dignified death.