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Obamas comments on Chrysler
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Anonymous
| What can't the media call him out for once? When Obama started complaining that his deal with Chrsyler didn't work because of the "speculators" he was just lying. Those were not speculators..they were creditors who technically loaned the company money and took in less percentage points to make sure their debt was secured. UAW is not a secured creditor nor should they be. Obama was trying to get the "secured" creditors to take pennies on the dollar to give a money gift grab bag to the UAW and the creditors called boo and told Obama where to go and he like a baby got mad. They know that if they went into bankruptsy they would get more of their money back than excepting what Obama proposed and keep in mind those "creditors" have funds that are holding money for many of the "little" people of the world so they have a responsibility to work for the rights of their clients. This is called the law and it actually works. But..Obama just lied about the reality of the situation and banked on most people not understanding sophisticated finance..and he is correct which is why it is important for the media to call him out when he is lying.. He is now trying to salvage his image by saying that he was fine with Chrylser going into bankruptsy..nah I don't buy it because in his perfect world, he would have jammed this irresponsible deal down. |
jsteele
Site Admin Online
Site Admin Online
|
Wah, wah, wah. The majority of the bondholders accepted the deal. Now, the biggest beneficiaries will be lawyers not "little people" who should have diversified their investments. Let's see how many of those heros of yours are actually covered by CDSs and will be getting paid off in full by AIG with government-provided funds.
On the one hand you have people who knowing took a risk by loaning money to a troubled company and on the other are people who worked for years while deferring salary into a retirement plan that is now unfunded. Strange that you only seem concerned about the first group and consider Obama to be "lying" when he stands with the second. |
Anonymous
| You've got to be kidding. You have 48 year olds in retirement and expected to be living off the company for maybe 30 years??? That doesn't make any financial sense which is why every car off the lot loses money. As for the bond holders--the largest said "I don't think so" and they shouldn't have. Why would they or should they??They should look out for their clients and yes they took a risk which is why they are secured creditors. They are not speculators and they should be praised and not ridiculed. What should be ridiculed is Obama giving a gift to the unions for voting for him. By the way, this isn't even political reasoning..it's law and Obama knows better since he is supposed to be a lawyer. |
Anonymous
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I think these bondholders are not telling the truth. If a private company did this, they could purchase the assets for the same $2b, rehire the employees, AND recapitalize the employees (or their retirement fund) to make sure they are still going to show up for work. So in this model the employees (UAW) haven't been put ahead of the other creditors of Old Chrysler. They have been recapitalized in New Chrysler. This kind of thing happens all the time in private transactions. The only odd thing about this one (aside from the fact that it is the government doing the funding) is that the new entity is taking on the liability of the Old Chrysler's retirees, but that has nothing to do with Old Chrysler's asset sale. That is more like a freebie that New Chrysler did not have to do but will do, and it does nothing to the value of the assets sold by Old Chrysler.
So I think this is a bit of grandstanding on the part of the debt-holders that does not hold water. But the proof is in the pudding. If they think they can sell the assets for more than $2b, they have every right to come up with that option and present it to the court. The one and only way they can get a better deal is to find a buyer willing to pay more than $2b for the assets of the company. Have I missed some relevant piece of this deal? |
Anonymous
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Yes you have missed several points.
Private and public corpations are treated the same in bankruptsy court The bondholders are not grandstanding--the have a fiduciary responsibility to look out for their clients. While Obama has been calling these bondholders speculators either because he has no financial background and doesn't understand or is just a jerk..both bad..these are funds that hold money for a lot of everyday folk (this is something the liberals are forgetting) including pension funds for teachers, highway workers etc. and the letter of the law is on their side not that we should treat a fund better because they have teachers in it but..for the sake of argument. Again, this is not political..this is bankruptsy law and no matter how much Obama would like to wrap up a nice little uncompensated package to the UAW..law will prevail. This is why he is so angry because he is a lawyer and he knows this to be true. Interesting that reports are now coming out about the Obama adminstration strongarming some of these bondholders to go along with the program. I immediately noticed this during his press conference where he called boldholders "speculators"--it didn't make sense to me and now..it all makes sense. So to recap--these bondholders that held out where high on the food chain of creditors..they were asked to take pennies on the dollar and it was not a good deal for them and they said no and they should have said no because the assets are worth much more to them. By the way..the UAW is an unsecured creditor so there is no way in law that an unsecured creditor should be treated better than a secured creditor..which is what Obama was trying to do as a thank you for votes. Sorrry..game over on that one Mr. Obama. |
jsteele
Site Admin Online
Site Admin Online
Not really. On the other hand, you missed a fairly important point.
When the previous poster mentioned a "private company", I quite sure she was not referring to Chrysler, but to the proposed new owners (a government, a labor union, and a foreign corporation).
Only two of the holdout bondholders have been publicly identified. In fact, they made a motion to the court just today to remain anonymous. So, how do you know these investors are all widows, orphans, and teachers? It remains to be seen whose side the letter of the law is on.
First, this is not a liquidation, but a reorganization. It's the difference of Chapter 11 and Chapter 7. Nobody knows the value of Chrysler's assets so its hard to say what the bondholders would get in a liquidation. But, a good guess is roughly zero given that nobody wanted to buy Chrysler and even Fiat is paying exactly nothing. The majority of the bondholders understood this and accepted Obama's plan. Even the lead fund of the holdouts tried to switch sides at the last minute but was too late. If the holdouts were not speculators before Chapter 11, they certainly are now. They refused an offer in hand based on speculation that a bankruptcy judge will give them more. That seems unlikely given that they are a minority of the bondholders. But, by all means, that's a risk they are allowed to take. However, it's way premature to be declaring "game over". |
Anonymous
| Please tell me that you are kidding??? Of course they had an idea of the value of the hard assets and of what could be gained from the assets moving forward. Apparently more than the pennies on the dollar they were offered. These are not dumb people and most funds do have a range people and pension funds were mentioned..again as I said..not that it mattered because law is law. Using the term speculator was a tool to try and push and humiliate into moving into a bad deal--(you are also going with this term making some kind of assumption apparently that these "creditors" are not acting in a lawful manner..they are). They shouldn't have done it and I am glad they said no--some people are unmoved by Obamas rhetoric and again..he has no financial background at all and Tim Geitner can't even get his taxes straight so he isn't a deep thinker either. What would be in it for them if it is better to not go with the deal. As for the number of bond holders (creditors)..doesn't matter, what matters is if the deal makes sense and these funds had millions upon millions upon millions--you can be sure it was a lot of money. Now a judge will go through and vet properly. You managed not to address the UAW and the attempt to put them above secured creditors. So again..Obama lost his temper because he had been had..Nancy Pelosi and Harry Reid can't even push on this one. Thank god something is sacred. |
Anonymous
Sure, I get that they are just doing their job. Their job is to make as much noise as possible in order to get more money for their people. It's still grandstanding, just like Obama is using the bully pulpit to put them in a corner. What bankruptcy do you know of that did not involve everyone playing hardball? What I would like to know is how exactly you feel that UAW has been put in line ahead of the bond holders? I mean technically, based on how the bankruptcy is to proceed, how have they been put ahead? If not, the bond holders who claim that this is upending decades of bankruptcy law are in fact grandstanding. |
Anonymous
| They are not grandstanding --they were negotiating on behalf of their interests and that it fine and it needs to be out there that they were doing the right thing for their interests and it doesn't make them a speculator who is dishonest and they absolutely should NOT go into a deal that doesnt work for them. What isn't fine is Obama getting into the middle of this process and attempting to subvert it in favor of the UAW--which is what the plan that Obama was promoting was doing and it was putting the interests of unsecured creditors above the bondholders. This is why Obama was so mad because he knows that in bankruptsy court the judge will go through who is the secured creditor and then the unsecured and a good judge will not care about poliical affiliations etc. |
Anonymous
*It's still grandstanding. Do they really believe that there is a buyer out there willing to pay a higher price for the assets of the company? No. But do they think they should get more money (from the U.S. government?) Yes. For that matter, do they really believe this is all illegal? Personally, I don't think so. I think they are throwing grenades just like Obama with his "speculator" quote. *Regarding "speculators", yes I think it undermines some who were making earnest investment decisions. But I'd bet dollars to donuts there are a lot of these latecomers who got in because they were betting on a government guarantee to protect the investment. That is speculation, pure and simple. *Obama is not taking Chrysler funds and redistributing it to the UAW. That money is coming from our government, not the proceeds of the sale of assets that secure their debt. *If Obama wasn't in the middle of this, Chrysler would be dead. Dead, dead, dead. The only reason this deal works is because the government puts money into it. So his noninterference would return zero dollars to the bond holders. *Regarding what the court will do, we'll see. Obama doesn't control the courts. But I think his lawyers are pretty good, and they are not going to fund the UAW plan from within the Old Chrysler entity. So my guess is that those funds won't be overseen by bankruptcy court. |
jsteele
Site Admin Online
Site Admin Online
. I guess things weren't quite as cut and dry as you believed. The holdouts just gave up and are no longer holding out. As a result, they forced Chrysler into bankruptcy for nothing. When the list of holdouts was released yesterday, it was clear they were all bottomfeeders who acquired "distressed securities" hoping to come out ahead. Obama was correct in describing them as speculators. They gambled and they lost. |
Anonymous
| It is so clear that you have no financial background and or you are just not a capitalist--maybe Cuba would be great for you. I can't imagine why I am putting aside work to answer this sort of stuff but the rhetoric that I see coming out of various blogs concerns me because it isn't accurate and I think people need to understand facts. Buying what would be considered a distressed property is perfectly legal and buying bond from another bondholders and enjoying those rights of secured orginal holder is also perfectly legal. When companies need to raise money many times they sell debt and the debt holders take additional risk so they are top on off the heap during bankruptsy. Now the bankruptsy process will work it's way through with a judge deciding on allocation not based on any political agenda (or at least one hopes)--the problem is turning this into some kind of political agenda i.e. Obama wanting to have the UAW get more out of this than a secured creditor--again if you rep the secured creditors, you work hard for your client ..being called a "botton feeder" may sound nice for the communists of the country but it is a sad state of affairs when a secured creditor should even being pushed to put aside their interest for political sake and good for the attorney who spoke up about the adminstration's attempt to push. Obama needs to let free markets work--they do work by the way. I found it interesting that I saw even some left leaning folks getting concerned with Obama's recent meddling--shows me that there are a lot on the left who really are more center than you would think..just as there are more on the right who are also to the center on a lot of issues. Again..I would hold off any excitement until the bankruptsy process goes through because anything a pr person says doesn't mean a hill of beans to an impartial judge and I do have faith that most judges will honor the law and the law on this matter is pretty clear. |
Anonymous
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Also want to add that the bondholders that initially rolled were banks that were given tarp money and were forced by the adminstration --which in in of itself is an awful commentary on the adminstration's practices--to take this prepacked deal whose only beneficiary would be the UAW and not the bank shareholders..taxpayers and all. The bondholders that didn't roll didn't take tarp money and the government could only try to humiliate them exhibit..Obama calling the speculators..and now only one bondholder from that group has said they will go along with the prepackaged bankruptsy.--so your characterization that the holdouts all rolled is innacurate. I haven't even gotten into how banks that didn't want tarp money were forced to take it and Obama now won't let them give it back since he wants to nationalize the banks (don't believe anything he says because the evidence is there). Oh finally Chyslers was going into bankruptsy whether the bondholders went along with a prepackaged bankruptsy or not--difference is going into bankruptsy for 30 days or more like 6 months or a year. Prepackaged bankruptsy all the lenders get together with a plan and a bankruptsy judge goes over the details. The better option for these bondholders in question is to defend their property right and get their money out even if it takes a year. Law is law and we have to stand up for law and fight tooth and nail any government entity that trys to overide law--and I would say this no matter who was president. |
jsteele
Site Admin Online
Site Admin Online
Okay, you are a finance expert are you? One would have thought that given your vast knowledge of the topic, you might have learned to spell "bankruptcy" by now:
The UAW hasn't been put ahead of secured creditors. The holdouts were offered an opportunity to exchange debt for equity. They refused, so they were offered cash. Not as much cash as they wanted, but enough cash to satisfy the majority of the bondholders. The UAW hasn't been offered cash, they've been offered equity. Whether that equity turns out to be worth anything remains to be seen. However, it is clear that this was too much of a risk for the bondholders. It is possible that the UAW will end up without a cent. Would you consider that being ahead of the bondholders who have been offered cash? If the UAW ends up making out like bandits, it just means the bondholders gambled wrong. They could have had equity. Nobody said the holdouts did anything illegal. That's simply a red herring. What has been said is that the holdouts speculated on an opportunity to make a profit. They gambled and lost. They forced Chrysler into bankruptcy hoping to strengthen their hand and ended up weaker. That is how the free market works, but of course your type of capitalist is only interested in a free market when it returns profits. It's interesting that the holdouts have not been able to put forth their own valuation of Chrysler. Earlier you insisted that they were smart people who knew exactly what it was worth. If so, why are they keeping it to themselves? This is, of course, the key issue for explaining why they deserve more cash. As for your statement about who held out and who didn't, you have been consistently wrong and continue to be. Originally, you claimed that the holdouts were the biggest investors. In fact, at most they controlled 30 percent of the debt. There were originally 20 holdouts, but dropped to 5 almost immediately. The 15 that backed out were all non-TARP firms. Now, I see that Oppenheimer and Stairway are withdrawing as well. The holdout group is disbanding. So, it's down to three holdouts representing less than 5 percent of the debt. Do you think the judge will ignore those who hold 95% of the debt and rule in favor of the three holdouts? For someone so convinced of your knowledge of finance, why don't you understand that in six months, there would be nothing left to liquidate? The plants are closed. No cars are being produced. Whatever cash remains now would be spent on lawyers and liquidation costs. The holdouts wouldn't get anything. |
Anonymous
And one would have thought that you, Jeff, would follow your own FAQs. Such as: "When you respond to posts, please be constructive, non-ironic, and polite." And "While other posters' questions and/or viewpoints may not seem relevant to you, they may still be important to the poster. Please treat them with respect and respond in a manner in which you would like people to respond to you." |