Crimes Against Liberty by David Limbaugh

Author:David Limbaugh
Language: eng
Format: epub
Publisher: Regnery Press
Published: 2010-08-23T16:00:00+00:00

THE MADMAN THEORY OF THE PRESIDENCY: OBAMA WANTED TO BE FEARED

The Chrysler case was even worse. The creditors competing against the UAW were secured creditors, presumably entitled to priority over the unsecured union workers. But the secured creditors were being heavily pressured to accept just a fraction of the amount of their claims: $2.25 billion of the $6.9 billion they were owed (29 cents on the dollar), while the unsecured UAW was offered some 50 cents on the dollar. The UAW agreed to concessions to freeze wages, cut retiree health benefits, and not to strike for at least six years. Chrysler executives still hoped to avoid bankruptcy and possibly merge with GM. But Obama’s inside man, Steven Rattner, the head of Obama’s Auto Industry Task Force, had virtually pre-ordained the outcome—bankruptcy—while publicly claiming he was studiously seeking to avoid that result. Chrysler’s CFO Ron Kolka said Rattner told him how it would go: bankruptcy, followed by a restructuring with the creditors, the union, and Fiat—not GM, even though Robert Manzo, a financial consultant for Chrysler, said he believed “the valuations of an alliance with GM were higher than those of a deal with Fiat.” It didn’t matter to Rattner, who had already decided as of March 30 that his task force would only authorize taxpayer money to be used for a deal with Fiat.

In an e-mail to Chairman Bob Nardelli, Vice Chairman Tom LaSorda, and Robert Manzo, Kolka wrote, “We need a deal with Fiat today. We were told to pretty much take it.” Nardelli said that Rattner and his politically radical colleague Ron Bloom—Obama’s manufacturing czar—“will call the union and tell them what will happen. Then they’ll tell the banks, ‘Here’s the deal: take it or liquidate it.’”17 In other words, Don’t bother us with valiant efforts to save your sorry company when we have plans to take it over and do with it as we please. And don’t try to negotiate better terms—or any different terms—any of you. We are the government and we’re calling the shots.

The four primary creditors, J. P. Morgan Chase, Citigroup, Goldman Sachs, and Morgan Stanley, agreed to the Treasury’s plan, but other lenders—mostly hedge funds—weren’t on board. Obama maneuvered himself into position to call these shots, because a condition of the TARP loans to GM and Chrysler was that the government would have the right to convert its claim to debtor-in-possession status, which has first priority under bankruptcy law.18 Reportedly, one of the lawyers on Rattner’s team, Matthew Feldman, got his nose out of joint in negotiations with Chrysler and refused to allow Manzo to sweeten the offer to the reluctant investors in a final attempt to avert bankruptcy. Feldman reportedly told Manzo, “I am not talking to you. You went where you shouldn’t.” Even after Manzo apologized—who knows what for—Feldman highhandedly replied, “It’s over. The president doesn’t negotiate second rounds. We’ve given and lent billions of dollars to your team, so your team could manage this properly. I’ve protected your management and board, and now you’re going to put me in a position to have to bend to a terrorist like Lauria.

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