Chrysler's bankrtuptcy undermines America as a Nation of Laws

Those evil hedge funds, the “small group of speculators” Obama so harshly critiqued for daring to be the Davids to his rampaging Goliath, are otherwise known as Senior Secured Bondholders, as in the creditors first in line to get paid - and they're going to get the shortest end of the stick, right up their butt.

"A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none,” Obama said.

Right, like the sacrifices that the UAW is making - giving up a few benefits and taking a small pay cut in exchange for majority control of the automakers (which will later on let them adjust their salaries to whatever they wish).

Some of the hedge funds, Obama said, demanded returns twice as high as other lenders were getting.

Senior secured bondholders are supposed to get the most money, in fact they're supposed to get paid out before anyone else gets a penny! The fact that this populist message resonates so loudly across the country speaks only to the citizens' legal illiteracy.

Does Obama’s team have even the modicum of rudimentary intelligence to recognize that in continuing to blatantly ignore and break our country’s laws they are ensuring that nobody in their right mind will ever want to invest in these companies ever again? How do they expect banks to shore up private capital or for programs like PPIP to work? The government's need for private sector help is only going to grow as it spirals further into debt, so it would be wise to cease alienating the investor class and start making real concessions and working together to save the economy.

Please read the full statement at blogs.wsj.com As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money. To facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more. Our offer has been flatly rejected or ignored. The fact is, in this process and in its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.