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May 06, 2009

Judge Okays Chrysler Deal, Despite Fact It's Unconstitutional 'n Stuff; Obama Official Admits $7.5 Billion in "Loans" to Chrysler Will Never Be Paid Back

The senior bondholders will stand behind junior, unsecured debtholders (read: the unions), despite what their contracts and bankruptcy law and the 5th Amendment's prohibition against "takings" might say.

And, surprise surprise, the government has forgiven $7.5 billion in loans (and interest payments) we were all told we'd get back, just the same as we got back the Iacocca-era loans.

Eh, it's $7.5 billion. Not even a rounding error in Obama's budgets.

(But his $100 million in cuts are serious attempt to curb government spending, you know.)

More: Names of Dissenting Bondholders Released. Chum for Obama's minions.

The names of nine dissident Chrysler debt holders were disclosed Wednesday, but a number of others chose to avoid the spotlight first put on them a week ago when President Barack Obama publicly chastised them for not supporting his plan for the automaker.

The nine lenders, which include previously disclosed members Stairway Capital Management and OppenheimerFunds Inc., represent just $295 million of Chrysler's total of $6.9 billion of secured debt.

Obviously these people have legitimate concerns about their safety. But I guess that's the whole point of releasing their names.

And another article on says that Obama "expects" to be repaid on part of the $7.5 billion.

The reality now is that the face value [of the $4 billion bridge loan] will be written off in the bankruptcy process," said the official, who added that the 8% equity stake that Treasury will be receiving as part of the company's reorganization is meant to compensate taxpayers for the lost money.

"While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated," said the official."

...

The Obama administration official said that other money being made available to Chrysler, such as the $4.7 billion that will go to the company as it exits bankruptcy, will be a loan that the government expects to be paid back. In addition, that loan will be secured by company assets, unlike the previous loans to Chrysler.

Well, the dissident bondholders had secured debt, and that's not being repaid.

Correction: The $7.5 billion is already gone; the $4.7 billion is a new loan, Geoff tells me. I think he's right, but it's not clear to me. For now, I guess, it's less of a correction than a question mark.

Thanks to Geoff A. (Anti-Harkonen Freedom Fighter Geoff).


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posted by Ace at 02:23 PM

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