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.

MS may spin off Quant Desk

Remember how everyone with half a brain said imposing pay restrictions on TARP banks will cause a massive talent drain? At least MS is smart enough to try and keep a portion of the profits by spinning off its top prop desk. Still, cutting out a lion's share of profits will certainly hurt the bank's ability to repay taxpayers and invariably will lead to a weaker bank down the road.
Unfortunately all that Congress cares about is that evil traders can make billions without contributing nothing to society while our amazing public school teachers and autoworkers, who've given this country so much, are out begging on the streets and turning tricks. Of course those traders did make a ton more money for the union pension funds than they ever made for themselves, but hey that's not the key point here.

clipped from www.finalternatives.com Morgan Stanley may transform its biggest proprietary trading desk into a hedge fund as a way to sidestep new government restrictions on pay and hiring. PDT has had only one down years since it was launched in 1993, and has earned Morgan Stanley some $6.5 billion in pretax income over that span. PDT’s top traders are reportedly concerned about pay restrictions imposed by the federal government on firms receiving bailout money, as well as those on hiring foreign workers. Any move to spin the group off could be an effort by Morgan Stanley to hold onto talent that might otherwise leave to start their own hedge funds, or to join existing hedge fund shops.

I smell a Rattner

And now we have another money scandal from our hopeful Administration. This time it's involving the poor taste and poor cover up skills of the new Car Czar. I guess if you've got some skeletons in your closet it's better to do community service for Obama than do time in the can.

clipped from online.wsj.com President Obama's auto fix-it man, Steven Rattner, is in the news as one of the Wall Street financiers hit up for big money as part of New York state's unfolding pension-kickback scandal. This is the same political class that has been blaming banks for "greed" in the financial crisis. The pension fund scandal exposes the myth of the superior virtue of the public and nonprofit worlds. Greed is universal. And the opportunity for corruption is enormous when political discretion is tied to vast sums of public money. In Mr. Rattner's case, SEC documents say he met with the brother of Mr. Loglisci to discuss acquiring the DVD rights to "Chooch," a low-budget movie that Mr. Loglisci and his brothers were producing. Quadrangle, through an affiliate called GT Brands, agreed to acquire the rights for about $89,000. Several weeks later, Mr. Loglisci told Mr. Rattner that Quadrangle would be getting a $100 million investment from the pension fund.

What? You thought communism didn't come with a police state?

This was one Bush program I was completely against from the start, as were most people who grew up in a totalitarian regime where secret police silenced all dissent, and used their power to usurp the civilian population's property and lives as they pleased. Before he was elected I naively thought that one upside to Obama will be that this case will be thrown out quikcer than my tax dollars in bailing out AIG. Apparently not. We can spy on our own innocent civilians all we want, but there is no “war on terror” and Gitmo residents will get taken care of by the taxpayers for life. I guess it's Change you better believe in, because we know where you are and what you're saying.

clipped from www.eff.org Friday evening, in a motion to dismiss Jewel v. NSA, EFF's litigation against the National Security Agency for the warrantless wiretapping of countless Americans, the Obama Administration's made two deeply troubling arguments. First, they argued, exactly as the Bush Administration did on countless occasions, that the state secrets privilege requires the court to dismiss the issue out of hand. They argue that simply allowing the case to continue "would cause exceptionally grave harm to national security." As a candidate, Senator Obama lamented that the Bush Administration "invoked a legal tool known as the 'state secrets' privilege more than any other previous administration to get cases thrown out of civil court." The Department Of Justice's second argument that is the most pernicious. The DOJ claims that the U.S. Government is completely immune from litigation for illegal spying — that the Government can never be sued for surveillance that violates federal privacy statutes. This is a radical assertion that is utterly unprecedented. No one — not the White House, not the Justice Department, not any member of Congress, and not the Bush Administration — has ever interpreted the law this way. Again, the gulf between Candidate Obama and President Obama is striking. As a candidate, Obama ran promising a new era of government transparency and accountability, an end to the Bush DOJ's radical theories of executive power, and reform of the PATRIOT Act. But, this week, Obama's own Department Of Justice has argued that, under the PATRIOT Act, the government shall be entirely unaccountable for surveilling Americans in violation of its own laws.