On Thursday Chrysler Corporation filed for bankruptcy. It turns out the Obama administration wanted to elevate the priority of unions in the capital structure over the secured creditors. Some of those creditors, the ones that had not taken TARP money, declined the offer, believing they can get more of their capital back in the bankruptcy proceedings. Now, these banks probably should not have lent the money in the first place, but good for them in insisting the government and Chrysler play by the rules.
The real question is, why did the federal government provide Chrysler $4 billion in loans in December, when it was obvious then that the company need to restructure under bankruptcy? The reason is that the President at the time, a one George W. Bush, decided to punt the issue to the next guy. Recall at the time that Congress had voted NOT to extend the loan, and President Bush stepped up and poured $4 billion of tax-payer dollars down the Chrysler drain (and more down the GM drain). It would have been a tough call right then to pull the plug, but it’s the President’s job to make those tough calls. As it now stands, the current President is beholden to the unions, and going to pull every trick in the book to direct taxpayer dollars to his union supporters. As they say, elections have consequences.
Author: Mark
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