(The New York Times) WASHINGTON — President Obama forced Chrysler into federal bankruptcy protection on Thursday so it could pursue a lifesaving alliance with the Italian automaker Fiat, in yet another extraordinary intervention into private industry by the federal government.
Flanked by his automobile task force of cabinet secretaries and business advisers in the White House’s grand entrance way, Mr. Obama announced a plan that would allow the United Automobile Workers, through their retirement plan, to take control of Chrysler, with Fiat and the United States as junior partners. The government would lend about $8 billion more to the company, on top of the $4 billion it had already provided.
The arrangement came after an intensive round of White House-sponsored negotiations among the Treasury Department, the union and Chrysler’s executives and creditors. After working through the night, a small group of debt holders balked at Mr. Obama’s final terms, leading the president to decide that bankruptcy could not be averted.
It was a stark moment, and one unseen in modern times, as the fledgling president deepened his involvement in a struggling but iconic American company. Chrysler, which Mr. Obama called “a pillar” of the industrial economy, invented the minivan and owns the Jeep brand.
Bringing to bear his White House megaphone on Thursday, Mr. Obama laid out the terms of a deal that he said would save well over 35,000 jobs. And with a hint of anger, he railed against the holdout lenders, now effectively a hostile group of business partners, whom he called “speculators.”
“They were hoping that everybody else would make sacrifices, and they would have to make none,” Mr. Obama said of the creditors, among them several hedge funds and boutique investment funds. “I don’t stand with them.”
Stop and think about what you have just read! Let me break this down for you:
- In the words of The New York Times “President Obama forced Chrysler into federal bankruptcy protection …… in yet another extraordinary intervention into private industry by the federal government.” The President is deciding that a private company must file for bankruptcy! This on the heels of firing the CEO of GM and retroactively taxing bonuses on Wall Street. What is wrong with this picture. This is NOT the role of the Federal government!
- Mr. Obama announced a plan that would allow the United Automobile Workers, through their retirement plan, to take control of Chrysler. The President and his advisors have allowed the union to use their retirement fund to purchase controlling interest in Chrysler after forcing it into bankruptcy. This will allegedly save their jobs but what happens if Chrysler continues to flounder and destroys the value of the pension fund? Who gets to pay for that, the taxpayers? If the union is willing to make this investment are they willing to live with the consequences of failure? If you or I lost our jobs and decided to empty our 401k to start a business, nobody would bail us out if it was a bust.
- After the Administration could not broker a deal with Chrysler’s creditors, the President lashed out at them for being “greedy”! Imagine the nerve of those guys expecting to get paid as much as possible for a bad debt. I mean they had the audacity to think that they actually deserved more than $0.30 or $0.40 on the dollar.
This of course, is just the beginning. Now they are making plans for GM and the path seems to be the same – forced bankruptcy and protection for the union. The airline unions must be pissed off. After all to save their jobs they had to take cuts and make concessions. That was before our new age of socialism and nationalization of businesses.
There are still more conditions of this bailout. And yes, it is still a bailout because the taxpayers are kicking in an additional $8 billion to make the “deal” work. The government, as part of its’ “special bailout conditions”, will require Chrysler to make “cleaner and greener” cars.
So where does this end? Or more appropriately, where will this go next?Later this week the government will release the results of their banking stress tests and tell us which banks will require “additional repairs”. Still looming on the horizon is the impending commercial real estate collapse and new legislation for regulating credit cards.
What happened to good, old fashioned bankruptcy? You know where company officials, creditors and a judge go and work out a plan to either save or dissolve a failing business. It wasn’t perfect but at least the government wasn’t calling the shots and the taxpayers footing the bill.
For Americans who choose to pay attention there are red flags everywhere. We are allowing the government to take control of the economy, nationalize businesses and the banking system. If we don’t stand up and make our voices heard the result will ultimately be a shift from capitalism to socialism. Are you ready to trade the American Dream for Socialism? Think about it, time is running out.
“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government — lest it come to dominate our lives and interests.” — Patrick Henry