I think Obama made a mistake today by demonizing some of the debt holders

[thewiseguy]

It is unfortunate that some investors and hedge fund managers refused to make concessions in regards to Chrysler's debts, but they are rightfully entitled to the money that Chrysler borrowed from them.

In my opinion it was very wrong for Obama to demonize these investors. This is perhaps why the the government should not be involved this intimately in the corporate business. Obama was speaking as if he was the CEO of Chrysler.

WTF was up with that screw you attitude towards debt holders who have even gone as far as insuring their stake in Chrysler?

What is exactly the problem now? Credit freeze? Do you really think today's speech is going to encourage more lending when you know the government might perhaps come back and bully you to make "sacrifices", and god forbid if you don't then Mr. Obama is going to go on TV and demonize you? :shrug:

[MarjorieG]

1. Were these recent speculative purchasers?

[Avalux]

2. They held out, hoping for a big federal $$ payout. Obama had every reason to say what he did

and I was happy to hear him stand with the employees (UNION) in this instance. Obama didn't demonize them; he simply called them out for being greedy bastards.

[marketcrazy1]

3. but the bond holders of the banks

and Fannie Mae and Freddy Mac and AIG............ THEY need to be protected AT ANY COST!!

[glowing]

4. Because they are being greedy. Everyone made concessions and they

want the full amount. If the company goes out tomorrow, nobody gets anything. The reason for concessions. It would actually be a good company to continue investing in with the govt backing them in the future.. once we turn the corner on this recession.

One of their larger debts is the loans they are carrying on their books. How many people have defaulted on a car loan at this point? And on top of that car sales are way down.

[marketcrazy1]

6. they were NOT asking for the full amount

their compromise was fair but went unconsidered....

[quiller4]

39. It wasn't fair and was rejected as well it should have been. n/t

[zagging]

9. The bondholders will get more in bankruptcy than they were "offered"

They were getting the bone with no meat.

[girl gone mad]

32. That's doubtful.

I'm sure the judge will give them short shrift, as they deserve. They have nothing to offer Chrysler, they were only in it for a quick profit and they alone forced the bankruptcy.

[rwheeler31]

5. The investors in hedge funds caused this problem.

They are entitled to do what screw the rest of the country.

[marketcrazy1]

10. the company dug this hole

without the bond holders who loaned them the money they squandered they would have been bankrupt long ago.................

[girl gone mad]

7. They bought the debt for .20 on the dollar..

and were holding out for .60 on the dollar.

This is what bankruptcy is for. They can go in front of a judge and argue their case now. They aren't owed a profit in the form of a government bailout.

[marketcrazy1]

25. I did not know that

I assumed (wrongly apparently) that these were the original bond holders..........

[DJ13]

8. Those "investors" that held up the deal are VULTURE CAPITAL funds

They bought the Chrysler debt at values far below what the Treasury was offering, but they thought they deserved more.

Those kinds of "investors" dont deserve respect.

[marketcrazy1]

12. let the sort it out in court

thats what bankruptcy is for.............

[nonconformist]

11. They demonized themselves.

I for one hope they don't get a fucking dime in the bankruptcy after the shit they pulled.

Hooray for Obama, standing with labor, unions AND taxpayers. I applaud him.

[marketcrazy1]

18. this will not be a big "win" for the unions

they will keep SOME of their jobs at lower pay with reduced benefits and the company is likely to fail anyway. I give them 2 maybe 3 years at best.. then.. liquidation.................

[ProSense]

21. Maybe

you're completely wrong.

[marketcrazy1]

23. they have already taken concessions

on pay and benefits........ will they be asked for more.

[Hannah Bell]

36. they lost $5.3 billion worth of health care on this deal, the $14-$16/hr portion of the 2-tier work-

force went from 20 to 25%, & provision to outsource more work. Right after the vote, despite promises (including Obama's) if they voted for the deal it would keep the line running, the entire workforce went on temporary layoff for up to two months.

Some "independent trustee" will vote the shares UAW supposedly owns.


What a crock of crap. The idiots cheering this as some kind of victory for labor are either uninformed, or corporate shills.

[heronkid]

26. Automakers to shrivel significantly

You're right 2-3 yrs tops in IMHO. The hyperinflation that is about to be unleashed with the massive deficits will make most vehicles too expensive for most of the middle class and the poor. This is why we should not have bailed the banks, the car makers, the insurance companies, etc.
The only cars available to these groups will be little box Fiats or bicycles.

[Hannah Bell]

35. it's not a win for labor, & obama *saying* he stands with the workers doesn't mean he does.

watch the hands, not the mouth.

the workers took a 5.3 billion dollar hit & got fuck-all.

[BeFree]

13. Damn!!

He is on our side isn't he? Good deal.

[The Magistrate]

14. They Should Have Taken The Deal, Sir

This sort of thing is going to have be done in other situations as this mess unfolds, and the example should prove useful.

[ProSense]

15. Here we go, the next

"taxing AIG Bonuses is unConstitutional" or the "government has no right to break contracts" style argument.

When it's not Obama is siding with greedy banks, it's Obama is being mean to those rich guys.

Good grief.

[girl gone mad]

20. If only Obama would take the same stance with the banks' bondholders..

then we'd really be getting somewhere.

[anonymous171]

16. Fuck them. They are all parasites. nt

[DainBramaged]

17. Wow, defending vulture capital funds on DU, who would have thunk it?

:crazy:

[ChimpersMcSmirkers]

28. No kidding. This thread has been freeped.

[TahitiNut]

19. When I hear "Hedge fund" I start thinking CDSs (in addition to whatever else they have).

I've gotta wonder if they're leveraged up the ass on CDSs and stand to make a bundle from AIG or some other imbecilic derivatives issuer.

[marketcrazy1]

22. yes I was wondering about that too

I wonder if AIG wrote swaps on Chrysler and if they have to pay ( if WE have to pay ) on them will they pay 100 cents on the dollar like they paid the banks? somehow I think not!

[FarCenter]

24. I agree - the hedge funds have a legal responsibility to their investors

They have to act in the best financial interests of their investors. Otherwise they get into big legal trouble. Look what has happened to Ken Lewis of Bank of America for going along with Paulson's request to help the government rescue Merrill Lynch.

IIRC, there are 46 hedge funds with pieces of the Chrysler debt. They each have some number of investors. So there are hundreds of investors who would have to agree with the Chrysler restructuring plan.

Unfortanately, we don't know who those investors are. However, pension funds, college endowments, mutual funds, etc, would be typical investors in these hedge funds.

[ChimpersMcSmirkers]

27. "WTF was up with that screw you attitude towards debt holders"

Well, Obama is trying to save Chrysler. Everyone else around the table agreed to make concessions, including other debt holders, except the hedge funds and the other vultures. They could care less about Chrysler staying in business since they'd make money on the fire sale. I applaud the President for stepping in and stepping up. Tough shit on the hedge funds. I guess they're learning that those easy profits have some risks. Poor guys.

[DainBramaged]

29. Hedge fund, short for 'I work in a money rendering plant'

and as disgusting as the real thing.

[hugo_from_TN]

30. 100% agree

[anigbrowl]

31. I take your point, but...

buying debt as an investor is inherently risky. If the debtholders want to play innocent and act shocked that th debt may not be worth as much as they hoped for, then I have little sympathy. they bought it with the expectation for a profit in return for their risk...and they'll probably still make a profit, just not as big a one as they hoped for. Corporate debt is like equity, the value of your investment may go down as well as up.

[taught_me_patience]

33. Agreed. It needs to be settled in court without the gov't

taking sides in the matter.

[Hannah Bell]

34. they'll do just fine. that was only theater for the rubes.

[JeffR]

37. Yep. the investors and hedge fund managers

are "rightfully entitled to the money that Chrysler borrowed from them".

And I'm rightfully entitled to the moving sidewalks and rocket belts Popular Science promised me back in the 60s. Seems the future didn't quite work out as planned for a whole lot of us, huh?

Imagine that.

[quiller4]

38. I'm really glad Obama said what he did. Bond holders

refused to negotiate in good faith forcing bankruptcy. They are entitled to something but they knew that their investment was not without risk.

[yodoobo]

40. Doesn't matter.

Its good political form to talk tough against the bond holders, and it makes us feel good, but it won't have an affect on the outcome of anything other than elections.

The treatment the bond holders receives will be determined by a Federal judge appointed by one of our previous Presidents.

How much the bond holders get will be determined based on CH.11 bankruptcy code and the judges idea of fairness within those bounds.


As it is, bond holders are somewhat in the middle of order of payment preference. They feel they'll do better in bankruptcy court and ultimately, the payoff for them is what matters, not harsh words.

That doesn't even get into the fact that many of the bond holders are holding credit-default swaps against these bonds whereby they are insured against losses by the likes of AIG and other government bailed out entities.

If they settle they get next to nothing. If they go to bk court, the government bailed out credit-default swaps pay off.

The whole thing is sickening.