Saturday, May 02, 2009

An Enchanting Twosome

Even the New York Times is dropping it's jaw over the deal the UAW is getting form the government over the Chrysler bankruptcy.
Labor unions usually dread bankruptcy, and for good reason. Their pay, benefits and pensions typically suffer significant cuts, as airline and steel workers can attest.

But for the United Automobile Workers union, Chrysler’s Chapter 11 case, which began in New York on Friday, could turn out to be — if the company survives and thrives — the Cadillac of bankruptcies. The U.A.W., for example, has received upfront protection from the Treasury Department for its pension plan and the fund that will take over responsibility for retiree medical benefits.

Moreover, that fund, called the voluntary employee beneficiary association, or VEBA, will control 55 percent of the equity in the new Chrysler once it emerges from bankruptcy, and hold a seat on the Chrysler board.
The deal as requested by the government would involve a transfer of at least $10 billion from the secured creditors (the bond holder's) to the unsecured creditors (the union and TARP banks). So it looks like the UAW is getting a good return on it's investment in getting Obama elected.

And according to attorney Tom Lauria of White and Case, the White House is resorting to openly threatening the bondholders with being publicly destroyed by the White House press corps if they do not accept the deal.

Frank talks with Tom Lauria, who represents a group of lenders that object to the Chrysler sale.

About 1 minute and 30 seconds in to this clip Lauria goes into great detail on threats and intimidation tactics allegedly being perpetrated by the White House.

Gee, who would think that the White House press corps would serve as hit men for this White House?

How enchanting.

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