Government theft!

Well they have finally done the unthinkable. The Obama administration is trying to steal from the bondholders of Chrysler in favor of the unsecured creditors. In the latest press release from the Administration they are wanting the bond holders (secured creditors) to receive about 10% of the company stock in exchange for forgiving the debt. These are the lenders who loaned money at prefered interest rates in exchange for collateral in the assets of Chrysler. The UAW pension fund is an unsecured creditor. In exchange for their forgiving a portion of their unsecured debt they will receive 55% of Chrysler stock! This means that Chrysler will now be owned by the very people who ran it into the ground and made them unprofitable in the first place. However since the UAW gave over 68 million dollars during the last campaign season to Democrats this is just payback.

In a normal bankruptcy proceeding in the corporate world the order in which the assets are divided are written in law. First to get paid are the debenture holders. They are the ones who write the "Commercial Paper", IE short term loans to keep cash flow going. Second in line are the bond holders third in line are the unsecured creditors and then preferred and common stockholders.

The Obama administration is forcing an agreement in which this order is not upheld and preference is given to the unsecured creditors over the bond holders. Since many of the bond holders are also TARP recipients they are not going to balk. They have been threatened by the administration. However, there are a group of bond holders who are NOT TARP recipients and they are holding out. They do not want .30 on the dollar and they should not settle for it either. The Obama administration has threatened them that if they do not go along they will sick the White House press corp on them and ruin their reputations. It has already started with Obama's attack on them last week calling them "Vultures". This is serious business.

If we allow this to stand we are going to see our mortgage interest, corporate lending and automobile lending interest rates skyrocket. If lenders cannot count on the existence of the rule of law in regards to their collateral standing for the debt then mortgage, corporate and auto loans will be at the same level as credit card interest rates.

How many jobs will be lost and how many homes will be foreclosed if we allow this to stand?