Comments on: Chrysler Bankruptcy Exposes Dirty Politics

Declan McCullagh: Obama Calls Creditors Who Lent Money To Chrysler "Speculators," But What About the Rule Of Law?

[69huslinone]

Justice Brandeis in the Radford case, 295 US 555(1935) said that the bankruptcy laws are subject to the 5th amendment. "Thus Congress could not pass a law that could be used to deny to secured creditors their rights to realize upon the specific property pledged to them" This "takings clause" means that no banruptcy judge, or even the congress itself can create conditions where property is taken without just compensation. The Bankruptcy law itself specifies the priority of how funds must be distributed. To use fancy talk about the timing and value, and the poor UAW does not change the fact that what the Government is trying to due, under illegal duress to the senior creditors is unconstitutional. We still do have a constitution.

[paulthiel]

Lin724,

Are you talking about greedy bondholders such as my parents? They bought GM bonds years ago as part of a "safe" nest egg for their retirement and are about to see those turned to toilet paper.

It isn't just "speculators" who will be screwed by strongarm tactics. In the end everyone is diminished when the agreed-upon rules are discarded for political paybacks and feelings of "empathy."

If you don't like bankrupcy law, elect people who will change it...If you don't like that process, move to Venezuela.

[omega39-2009]

I am sitting here reading this and absolutely crying over the plight of these poor, poor creditors...My God, when will the unjustness and unfairness end for these poor souls?

[AJBaker2]

The contracts between the UAW and Chrysler are just as sacred as any others. When was the last time you negotiated for a raise from your boss, got it and then turned it down?

Also, it has always seemed to me wrong that the pensions received by workers who have performed their part of the contract and who have limited means of recovery should be so far down in the seniority schemes for debt. This tempts firms to underfund them because short changing the retirees does not impact their ability to get capital. But the unsecured nature of the debt to the pensioners is what the law is.

This case is going to the Supreme Court. While it is true that we the people have provided billions for GM it is also true that if a normally bankruptcy had occurred that the senior debt holders would have received more than is being proposed now.

[Parker1227]

I heard that the UAW just agreed to the "concession" of working 40 hours before OT starts. Many workers have been getting paid over-time after 30 or less hours.

So UAW auto assemblers, half of whom do semi-skilled repetitive labor, have been making about $100 an hour during 25% of the week!

And we wonder why we can't compete with foreign run plants that pay the poverty stricken rate of only $40 an hour?

[Parker1227]

I can't believe this. Obama and his crew are going Hugo Chavez on us, and we can't stop them in the Supreme Court?

Please someone tell me this is being challenged.

I refuse to finance this robbery.

Boycott GM and Chrysler!

Let Obama and his crew choke on the consequences of thinking they can play neo-Marxist, third-world dictator with the rule of law and the American people.

[steve668]

The ramifications of the President deciding to disregard basic contract law for political payback to unions is frightening. These senior creditors which are capital investment hedge funds (which 401Ks and Pensions invest in) decided to make risky loans to Chrysler 2 years ago to avoid bankruptcy. They made these loans at very low interest rates in exchange for being first to get their money back should the company go under. This is basic contract law, basic rules of business. How many companies that are in trouble do you think will be able to get these kinds of cash injections of capital if the President can decide to change the rules if it benefits his political special interest groups?

[thgdriver]

I did not like Chrysler cars 10 years ago, I did not like them 5 years ago, I did not like them a year ago, and I still wont like them tomorrow. Chrysler is doomed, if Mercedes could not save them what makes you think Fiat (LOL) can save them? Who wants a Chryslafat in their driveway/garage?

[peetrerb]

<b> Quit spending our money. Let them fail and start new without the extreme benefits package and wages that the union has strong-armed over the years. <b>. We can't be competitive when our vehicles cost 1500 bucks more then our foreign counterparts!

[petergrt]

A change we can believe in!

Who needs contracts, laws or even a Constitution? So long as we have fairness - according to The One!

[golfered2]

Lin 274

Is Your Name Chavez!!!!!! and do you live in Venezuela!!!!!!!!

[quapawsix]

Are you not entertained, what drama what intrigue what outrageous indignation, everyone stand and wave the power elite bye bye next to go is the corrupt government, then, and maybe then, we can get on with life.

[golfered2]

I?m a Regan Democrat who came back to the Democratic Party 8 years ago, wanting to see change in our government and country. I was ecstatic to see the Democrats take the White House and control of both the Senate and House of Representatives. We bought some GM bonds to also give us some additional income and spending money and have become VERY concerned with the Government Task force and the distribution of ownership for the UAW, US Government and the stockholders and bondholders. The idea that the UAW who is owed 10 Billion dollars for a buyout of retiree benefits and the US Government who is owed 15 Billion dollars for the loans made to GM will own approximately 89% and the bondholders who are owed 27 Billion dollars will receiver 10% of GM sounds like something that Chavez would try to do in Venezuela. This certainly is NOT the change Americans wanted in our country. This CERTAINLY sounds like a dictatorship and contrary to everything our great country stands for.

In the last 10 years the quality of the big three automakers has improved tremendously and is probably close to the quality of the Toyota?s, Honda?s and other foreign automakers. The problem is that probably 1/3 of the car buyers in this country have bought the foreign cars and are extremely happy with these vehicles and even admit that the quality of the US made cars is probably as good as the foreign made BUT will not switch back to the cars manufactured by the big 3 US manufacturers because they love their cars and will not switch. You have a group of buyers like me, that are very willing to buy vehicles from the big 3 but are getting tired of seeing the benefits and giveaways to the UAW. A friend of my brags that during the 9-week shutdown announced by GM that he will receive more than 80% of his pay each week while he is not working. I quite frankly am pissed when I hear things like this. My bond money in GM and my taxpayer money is being spent to give UAW workers 9 weeks vacation during the summer with over 80% pay!!!!!!! If GM and Chrysler end up being owned by the UAW, I personally will never buy a UAW made car again. Talking with a number of my friends, we all feel this way.

[mauriciott]

The article is no doubt a conservative outcry against the government's intervention. It is rightfully so if republicans are to preserve the purity of their ideology. But things are not exactly as they look. When the State is faced with "catastrophic" social hazard, it is it's duty to act beyond normal and ideological lines, even over party lines if it is necessary for the right solution to be achieved. Agree that Chrysler's downfall is the cumulative effect of errors by management but these errors were shared by investors when they decided to put their money to back management policies. They had the opportunity to invest somewhere else so it is not that capital is or has to always be exempt of losses when taking the wrong path and in this case it surely did. On the other hand, workers gave their best or not, but had a specific contribution to the company and the benefits collected by investors through the years. So, is their right a second hand opportunity?
The truth is that what this shows is how America has failed to follow it's most dear believe when it comes to the econmy. This is a capitalist society and capitalism is the balance between labor and capital to produce profit. Has it been this way for the past 20 years? has there been a balance? I believe not.

[califmike]

I will be putting my wallet where my mouth is.
I will NEVER buy another Chrysler product EVER again (or GM for that matter).
They (Chrysler/UAW/Obama) can sit on that and spin around.

[Shazaam36]

Shareholders own the company in which they hold shares. When a company declares bankruptcy, the creditors are paid off, then the bond owners and lastly, the shareholders still own the company but at a much reduced asset value. In the case of Chrysler, the shareholder/bond owner keep a very small ownership of the company while the UAW gets 55% and the Government and Fiat get the rest. The UAW continue to draw almost full pay even though they don't go to work. That money is coming out of the Chrysler coiffures that is needed to run the company when it emerges from bankruptcy. But that is OK because the taxpayer will donate what ever funds are needed in the future.

[burkarak]

Good to here that at least some people are seeing the light that this govt in general is bankrupting this country. I don't think that it would have mattered who was voting into office neither of them were saying anything that made sense. Just like we should have done with the automakers lets liquidate congress when the elections come around again these clowns only care about their own personal interests and not the real American people.

[dukussone]

I'm stunned..............The Royal Highness the Princess Obama has a critic from CBS News. I am so in shock over this story, I thought I was on Foxnews.com for a minute. I'll come back and comment after I pop a tranquilizer.

[adguy51]

I agree with this story. Our government should have never given Chrysler and taxpayer money. Most Americans choose not to buy Chrysler products, They do not meet today's quality standards, the sad fact is, all American's now must pay to keep them in business. Building vehicles that American's don't want to purchase. This will be a big failure, American's won't buy the vehicles and they will keep loosing money. It's sad for the UAW, I agree, I also feel that most Americans don't have a government lifeline, Why should the Unions? Chrysler should be allowed to liquidate, the folks that invested in Chrysler should be paid, following the law. I voted for Mr. Obama, I now regret my vote.

[garyl615]

Why should the unions??? Are you as strong in your beliefs about the lifelines to the banks? to AIG? Its not the workers (union or non union) thats bringing this country down. Its the pornographic greed of the corporations!!! Corporate Vision... Work 'em anywhere for as little as you damn can and ship the product anywhere the damn money is!!!

[jonesjep]

I will give CBS some credit. That actually admitted that the Obama administration was strong arming these people. Now lets see if they will continue to be journalists and put this on the evening news or if they will sweep it under the rug.