Monday, May 04, 2009

Obama Destroying Rule of Law

Power Line's John Hinderaker calls it "Banana Republic Capitalism."

The Chrysler reorganization is shaping up as another milestone in the decline of the rule of law under Barack Obama. We've said for quite a while that bankruptcy is the only viable option for Chrysler and General Motors, not--as Obama claims--because they don't know how to make the right kinds of vehicles, but because their unsustainable union contracts make it impossible for them to be profitable. That reality has now been turned on its head, as the administration has tried to bully Chrysler's secured creditors into going away, while the United Auto Workers Union, solely on the basis of political clout, would be paid at an implied rate of 50 percent and would emerge owning 55 percent of the company, with the government also holding a stake.

This is banana republic capitalism at its worst. Political influence, rather than the law, dictates the rights of the parties. When some of the secured creditors refused to be intimidated, Obama
libeled them in the press, saying, outrageously, "I don't stand with those who held out when everyone else is making sacrifices." Actually, under Obama's plan the politically favored parties, principally the UAW, will benefit--will steal money, to put it crudely--from the parties who held out. Those parties call themselves the "non-TARP lenders."

Obama's a liar. "[E]veryone else is making sacrifices" is just not true. The UAW isn't making any sacrifices whatsoever.

For Chrysler, the administration's plan spells disaster. It is inconceivable that the UAW, the principal source of Chrysler's problems, will manage the company back to profitability. More likely, Chrysler will become a vehicle through which the federal government provides uneconomic subsidies to unionized auto workers and retirees.

Barack Obama's conduct in this affair has been disgraceful. Our bankruptcy laws are well developed and are fairly implemented by experienced bankruptcy judges. Priority among creditors is established according to legal rules and precedents. The process is transparent and subject to appellate review. But in this case, the law did not favor the parties who have the most influence with the White House--notably, the United Auto Workers--so Obama substituted political threats and bullying for due process.
Il Duce would have approved.

Hinderaker has an update at the bottom of the post, quoting Michael Barone's explanation on how this policy of Obama's is turning the rule of law on its ear.

Hinderaker's follow-up post Saturday has more. He quotes from a Saturday Island Turtle blog post that provides a transcript of an interview with a bankruptcy attorney involved in the Chrysler case, Tom Lauria:

Lauria: Let me tell you it's no fun standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent. That's a moving target. I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House Press Corps would destroy its reputation if it continued to fight. That's how hard it is to stand on this side of the fence.

Island Turtle (a retired newspaper man) concludes this way:

There is a pattern here. Financial institutions holding billions of Chrysler’s secured debt are being held hostage by the TARP loans they are not permitted to pay back. They are being forced to accept just pennies on the dollar for loans they made in good faith less than two years ago. Just like mob loan sharks, the administration wants them under its thumb so they can extort more and more concessions.

This is an abuse of power that goes beyond Nixon.


Indeed. And it's just the tip of the corruption iceberg.

23 comments:

Malott said...

This is why God created Toyota and Nissan and Honda...

jubberjournal said...

Greetings!
This is Jubber Journal you stopped by my office a few years back, and we chatted about Zimbabwe. I have reworked my blog layout, and thought you might stop by and check it out. Hope you are doing well, and look forward to hearing from you!
Regards,
Vic

paw said...

"It must be very strange to be President Bush. A man of extraordinary vision and brilliance approaching to genius, he can't get anyone to notice. He is like a great painter or musician who is ahead of his time, and who unveils one masterpiece after another to a reception that, when not bored, is hostile."

John Hindraker, 2005John is an astute fellow. I'm sure he's right on about his this one, too.

SkyePuppy said...

Paw,

"No political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration." - Obama (now broken) campaign promise

So, What does Hinderaker's comment about President Bush in 2005 have to do with his analysis--as an attorney--of Obama's screwing with established bankruptcy law? I thought you were above non sequiturs, but if that's the game you want to play, I played along too.

Forcing secured creditors to take 21% on the dollar when they should get 100% (and accepted 50%), and then giving unsecured creditors (the Dem-funding UAW) 50% is just plain wrong in too many ways to count. Ignore it if you like, but the Obama administration is a menace to the country.

paw said...

That's totaly relevent. Consider the source. Hindraker is consistently beyond the bounds of rank partisan. He's not a serious fellow.

SkyePuppy said...

Paw,

So Hinderaker isn't a serious guy. Fine.

But what about Michael Barone, and Corky Boyd (Island Turtle), and bankruptcy attorney Tom Lauria? Are you discrediting them just because Hinderaker isn't serious?

Come on! Strong-arm tactics from the White House that throw established law on its ear for the benefit of the unions that funded Obama's campaign, and all you can say is that Hinderaker isn't a serious fellow because he thought Bush was great in 2005.

Paw: "Nothing to see here, folks. Move along..."

Sheesh!

paw said...

You're going to the wall on this one?

The line set by Hindraker on this is pure smoke, as is Hindraker's known style.

Name a law that has been violated or set aside. Dare you.

Tsofah said...

Paw:

For Skyepuppy to take you up on that dare, she could be considered practicing law without a license (small smile). Soooo......

It might be easier for you, Paw,to name one he hasn't violated??? (grin)

Obama IS re-writing financial laws with a broad stroke of his arms and pen. This is something that should be put before Congress and voted upon.

Then again, Nancy and Barney, et al signed on with Bill, and later with GW, the laws that enabled the Freddie and Fannie crises. At least THAT was a bi-partisan screw up.

It seems just as the market begins to recover a bit, Obama makes yet another speech and established another policy that sends it to the basement.

paw said...

Tsofah,

No, you name a single instance where the Obama admin is outside the law. Just one. You don't just get to say crazy stuff like that without expecting to get called on it. You're being called.

SkyePuppy is claiming a destruction of the rule of law and posting an opinion that Obama has gone corrupt beyond Nixon. Again, you just don't get to say something like that. Put up.

Here's a refresher of actual Nixon crimes. Breaking and entering, robbery, directing government agencies to cover it up, obstruction, illegal wiretapping - there's more but you get the point.

Do you people get that words have meanings? Do you get that there's a difference between not liking something and what is illegal?

SkyePuppy said...

Paw,

I don't understand how you can fail to see what I've already said.

The Nixon comment was a quote from newsman Corky Boyd. His conclusion. Yes, I quoted it to show what other observers have concluded.

My conclusion is that Obama is corrupt. He's paying off the UAW big-time at the expense of businesses that deserve to be paid first.

Businesses and individuals depend on the accepted practices of bankruptcy and contract law to make their decisions. Chrysler's secured creditors paid to get a secured position, and the Obama administration in return has flipped them the bird and shoved it up where the sun don't shine.

Illegal? I didn't say that. I said corrupt and a liar. But the administration's threats may extend into illegal territory, if only the creditors were willing to sue or press charges.

Now you tell me how the Obama administration's handling of the Chrysler bankruptcy, including directly threatening secured creditors and paying off political supporters, is a good and proper thing that you wouldn't have complained about if Bush had done the same thing. I triple dog dare you!

paw said...

Honestly, I'm not so sure that I'm square with what's been going on and a guy would need more than these little text boxes to try to make case if he were so inclined. But a dismantling of the rule of law and equivalent to Nixonian levels of abuse it ain't. You have a good time out there on the fringe, now.

Tsofah said...

Paw:

I think you are mistaken. This is Skyepuppy's blog. My blog is my blog. We can write/say anything we darn well please, thankyouverymuch. So can you on your blog.

The scarey part about Obama is that he is able to get away with so much.

For instance, the incident with one of the planes that is Air Force One when Obama is flying on it. There is no way Obama would not have known that plane was doing it's photography stunt. No presidential plane gets off the ground unless the president says "wheels up"!

If this stunt had been during the G.W. Bush administration, the press and people would have been down on him like white on rice. The late night talk shows would have raked him over the grill!

Yet, because it's Obama, with a wave of his arm the media lets it go. There was nothing amusing about a stunt that reminded people of the greatest mainland terror attack in U.S. history.

It's amazing to me how you are a veteran and yet so different from my dad. You served in 'Nam? So did my dad, and in Korea, and the Philippines.

Both of you have war experience. Yet, Dad would have agreed with Bush 100 percent. He would have been greatly disappointed in Obama.

SkyePuppy said...

Paw,

Let me summarize to be sure I understand your last comment. Please correct me if I'm wrong. I'm not trying to mischaracterize what you've said.

1. "I'm not so sure that I'm square with what's been going on..."

I think this means that you don't believe the changing of accepted bankruptcy practice is a good thing. If so, I'm glad we agree on that much.

2. The thing that has you most upset is the comparison to Nixon.

Again, that wasn't my choice of words, and it hadn't occurred to me before I read it, but yes, I posted that quote.

Naturally, since Obama's only been in office for 100-ish days, he hasn't had the opportunity to get into the kind of trouble that Nixon got into in 4 years. Give the guy some more time... (Sorry, just pulling your chain).

I do see this payoff of the UAW as crass corruption. It's the kind of thing that the media would be sure to trumpet on the front page endlessly if it had been a Republican administration, say, forcing a union to hand over monetary control to the NRA, contrary to accepted legal practice. But of course, this is the media's guy helping out the unions and sticking it to the greedy capitalist scum on Wall Street, so they'll keep the story on page D22 with the broken-street-sweeper stories.

Here's Rep. John Campbell's (R-CA) take on this. He's not only a Congressman, but is a former owner of (I believe multiple) car dealerships, so he knows the car business.

For a president who says he wants to fix the economy, this deal with Chrysler is serious enough to shut down capital investment across the board over the uncertainty this introduces, and will deal a serious blow to the economy, not fix it.

Finally, I'll end with a lighter note, because I keep forgetting that Obama is not just the President, he's also a celebrity.

SkyePuppy said...

Paw, mon cher,

One more thing. Why do you keep misspelling John Hinderaker's last name. There's an "e" in the middle of it on the Power Line website, so I'm guessing that's the correct spelling. Is it some sort of passive-aggressive tic, the way Endora could never remember Darrin's name on Bewitched? Just curious...

paw said...

Tsofah,

Couple quick things.

First, I generally like you and your voice.

If comments are open you're going to get comments. I don't expect to change a poster's mind, but I expect them to be able to back up what they are saying. IMHO SkyePuppy rose to that occasion here. And now there's another view point for anyone who happens by and they can decide if they want to get on board with Hindraker. I think that's what all this is supposed to be about. That's the way I approach this. I will come in a little stronger if I perceive someone's post or comment as super negative.

I was 8 when Saigon fell - still remember that. I'm not a vet. I have a connection to that world but thats my own business and not a chip in a debate. I know people. I might sometimes cite someone I know, but appealing to authority isn't my usual deal. I'll go that way usually only if someone goes down the "if you only understood..." path.

Sorry, but the right wing obsession with "if Bush or a Republican did it" is silly to me. You see that because you believe it. Also, the last I heard I thought that Obama wasn't on the plane for that photo shoot. If you have something credible (not Hindraker or a Turtle Pond guy) I'd be interested in that.

paw said...

I know a guy who was an associate attorney with Hinderaker way back. My friend is passionately opposed to Hinderaker's views, even more so since I think he measures himself against him in the way that some guys do. This guy calls him Hindrocket and he just spits it out in disgust. Me, I don't go in for things that course. But there's something about the way he says it that it has stuck in my mind. So when I think of Hinderaker, I first go to Hindrocket and then I have to correct. I've been leaving out that E I guess.

paw said...

ma cherie, I'm not convinced that the bankruptcy process has been circumvented in a nefarious way. When big entities approach bankruptcy, all bets are off and the intervention is something that any knowledgeable player would have to understand was always part of what was possible. I'd go so far to say they were counting on it, though maybe not in the way it went down. The idea that bankruptcy is a rigid, predictable process is a farce.

Union concessions (there are concessions) in exchange for an ownership stake makes me uncomfortable.

I don't really support the Chrysler package in any way, though I haven't yet been convinced that its a wholly bad thing, either. I'm persuadable. Going all "rule of law out the window!" and "NIXON!" won't draw me in. Nor will alarm bells from the usual excitable conservatives lamenting the death of capitalism. I'm watching though....

Tsofah said...

Paw:

SIGH.... Okay...clearing up some stuff here:

Sometimes I try the "humor route" and it works. Then there are times, like today I guess, when it falls like a lead balloon. It was with a smile I wrote the comments about all of us being able to write whatever we want on our blogs. (You had said something to Skye about "...you can't write that...") So, as usual, I am duly noting that for me a career in comedy is not a good idea.

Secondly: About the plane...no, Obama was not aboard. However, any of the planes that are used as "Air Force One" are not to just take off at any time. They can only do so with the authorization of the president. So, although POTUS wasn't on board, he STILL had to give the go ahead to take off.

Third: Yes, there IS a different in how the media handles Obama and how they handled Bush and ALL OTHER past presidents, including Clinton. Usually by now the "honeymoon period" with a new president is over. Obama can do no wrong, even when he does wrong. There are many things that have been going on with our foreign policy the past two months that have not been given even a cursory nod by our media.

Oh, I get the difference between disagreeing with something being done; and if it is a legal or illegal action quite well. For instance, the actions Obama is taking for rewriting the tax code. He has single-handedly said "This is what I'm going to do" and that is that. I guess I shouldn't complain too much, because if it is miraculously submitted to Congress for a vote, it will automatically be passed because it's "Obamessiah"'s idea. Perhaps the president is putting a new definition on "going green" and saving energy by not having to leave the lights on in the House chambers? (silly grin)

Seriously, some of the ideas put forth by POTUS sounds great on the surface. Once you dig a little deeper, in most cases, you find there are "domino effects" that do more harm than good to the people if they are implemented exactly as presented.

About 'Nam...my apologies. I apparently misunderstood what I read on your blog and it's description.

Later!

Btw, I like some of the things you post too.

ChuckL said...
This comment has been removed by the author.
ChuckL said...

Eerie how financial wizard President Obama speaks more vehemently toward Americans who oppose his policies than he does toward enemies who threaten national security. One of many examples comes from the Chrysler financing proceedings as a group of lenders continues to oppose the plan.

******
U.S. Bankruptcy Judge Arthur Gonzalez overruled objections from a dissident group of Chrysler LLC lenders, who argues that the loan was too closley tied to the sale, setting Chrysler on an irreversible path to complete the deal at the lender's expense. "As the court is aware, we're concerned htat we're starting construction of a bridge that may turn out to be a pier," said Tom Lauria, an attorney for the lenders... The biggest obstacle appears to be Lauria's clients, who may be forced to disclose their identities today... The group of holdout lenders refused to take the four banks' deal and go along with the government's restructuring plan for Chrysler, and President Obama blamed them for pushing the automaker into filing for bankruptcy protection Thursday. "I've never represented a group of creditors who were called out by the president of the United States for just standing up for their rights," Lauria said. (Associated Press, Kokomo Tribune, 5/5/09, p. A5)
******

A point in the proceedings is that a group of legitimate lenders to Chrysler do not want to agree to their lot in this bankruptcy agreement being pushed on everyone by no less than the President of the United States. Where does that show up in the U.S. Constitution?

In response to the lender's legal claims, no less than the president of the United States demonizes and mocks their efforts. One of the unfortunate side effects is that those opposing the agreements are actually receiving death threats.

Additionally, the whole Bush-Obama bailout plan is a violation of the constitutional authority granted our federal government. Whether or not one can point to any "law being broken" by the Obama administration, it is not at all hard to discern that the "rule of law" is being eroded as private contracts are voided and changed at government's whim and pleasure.

And, BTW, former President Bush was howled throughout media coverage for cronyism and other such attachments as he began the Bush-Obama bailout plan, yet President Obama is hailed a genius as he pours taxpayer money into favored institutions. It is not a mere "conservative fantasy" that the two are treated differently by Big Media. Yep, if this was President Bush doing and saying these things, these unfortunate lenders would probably have the power of the ACLU behind them already. (OK, perhaps a bit of hyperbole; but maybe not).

ChuckL said...

"Nor will alarm bells from the usual excitable conservatives lamenting the death of capitalism."

What is it about the death of capitalism that does not alarm you?

ChuckL said...

"It seems just as the market begins to recover a bit, Obama makes yet another speech and established another policy that sends it to the basement."

What I am encouraging investigative journalists to do is to mark President Obama's (& other key political figures') current net worth and compare it to their net worths at the end of his term. The president certainly has proven his capability to manipulate markets.

While a change in their net worth may not necessarily indicate insider type activity, it could be enlightening. If nothing else, it could present an interesting pasttime.

ChuckL said...

Paw writes, "Name a law that has been violated or set aside. Dare you."

By the same the same token, name a law that has been violated or set aside by the so-called holdout lenders. Dare you.

Yet, President Obama sees no problem whatsoever with implying that they are nothing more than nefarious villains who won't pony up to his politico-economic "solution."

Yet again, show me the constitutional basis for government to intentionally go after private, law-abiding citizens simply because they don't want to play the politician's game.

Of course, what is conveniently left out of this administration's consistent hyperbole is that those so-called holdouts also represent large numbers of clients who rely on fixed income investments for part or all of their livelihood.

Perhaps no law has been violated or set aside, but the ethics of this administration in this and other instances are leaving a lot to be desired.