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Monday, May 4, 2009

Someone is Being Ruthless

There have been some serious allegations made so it's time to lay everything out. Last Friday, a bankruptcy attorney named Tom Lauria charged that the Obama administration was trying to strong arm his clients into accepting a restructuring deal for Chrysler. This followed up another report in which the White House was openly trying to demonize the hedge funds that were holding out on the Chrysler restructuring deal it had orchestrated.

On Saturday, Jake Tapper, of ABC News, reported the same thing.

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.

The White House and a spokesperson for the investment bank in question challenged the accuracy of the story.


Then, the White House denied the allegations.

The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there’s obviously no evidence to suggest that this happened in any way.”

Furthermore, the two creditors, Oppenheimer Funds and Perella Weinberg Partners, each denied being threatened themselves.

Someone is being ruthless and their ruthlessness is ultimately hurting the country. If Lauria is to be believed, the White House is trying the extort concessions out of creditors and they are willing to employ the White House press corps to smear them in their extortion. If he is lying, then a bankruptcy attorney is willing to smear the White House in order to strengthen the case of his clients.

If this is true, then it will become nearly impossible for any struggling company to ever get credit in the private market. Who would ever extend credit to a private company knowing full well that the White House is ready and willing to smear any creditor in a strong arming attempt to get them to accept terms the White House is orchestrating?

If it is false, then the entire corporate bankruptcy process has been turned into a sham. If lawyers are willing to smear the White House in an attempt to strengthen their own clients' positions, then just about every bankruptcy will have this sort of accusation a part of it. Soon, the public will believe the White House is micromanaging the business of every struggling business.

One way or another, the truth needs to come out and this story should be followed.

4 comments:

Anonymous said...

Exhibit B: http://www.forbes.com/2009/04/23/lewis-bernanke-paulson-personal-finance-investing-ideas-merrill-lynch.html

A different case, only one party remains the same...

Mad Dawg said...

I'm sure as hack not buying any bonds and selling the ones I have. This is tyranny. Just as the Judge made law means it's hard to avoid crimes and torts, so also president ad hoc rules and laws make prudent investment nearly impossible. Whatever the truth of Lauria's remarks, when O'Bummer went before the media to excoriate debt holders who wouldn't play ball with him he made the investment industry dependent on his good will.

Anonymous said...

I shall play the world's tiniest violin for the hedge fund jerkoffs who got us into this mess.

Jamal
USMC

mike volpe said...

Jamal, that's not only beside the point but your attitude is part of the problem. Whether they deserve it or not is not the issue.

what is the issue is that Obama is trying to strong arm creditors into taking deals they don't want. This is a private transaction, and they have a perfect right to take this to bankruptcy. He didn't want that and thus, he tried to extort them into taking a deal they didn't want. If this happened, it is very dangerous and no one can stand for it.